Egyptian economy is expected to see growth of 2.7% in fiscal year (FY) 2020/21, down from 3.6% in FY 2019/20, according to the World Bank’s Global Economic Prospects report.
The report said that the country is forecast to see further growth rise to 5.8% in FY 2021/22.
It also said that Egyptian economy has been heavily disrupted by the novel coronavirus (COVID-19) pandemic. However, it added that a contraction for the year was avoided thanks to previous government reforms that rebuilt policy buffers, ensured resilient consumption expenditure, and the input of international assistance.
“Monetary policy adjustments have also helped to cushion the economic impact of the pandemic, with the average policy rate declining by over 125 basis points, and by 400 basis points in Egypt,” the report read.
The World Bank report highlighted that increased public spending has in part been financed by increased international debt issuance in Egypt, Oman, Qatar, and the UAE. In some cases, this debt issuance occurred with higher yields than in early 2020.
The scope for fiscal support, however, has been limited in oil exporters by the collapse in Saudi oil prices, and in some oil importers by high government debt in Egypt and Tunisia, the World Bank disclosed.