Egypt’s economy is expected to grow by 2.3% in fiscal year (FY) 2020/21, down 0.4% from the previous project of 3.7% in January 2021, according to the World Bank’s Global Economic Prospects report June 2021.
The report said that the country is projected to see further growth rise to 4.5% in FY 2021/22, down from 5.8% in the previous forecast in January 2021 with a decrease of 1.3%.
The report further projected that the Egyptian economy would grow to 5.5% in FY 2022/23.
The report noted that regional equity prices are mixed, remaining below pre-pandemic levels in Egypt, Bahrain, and Morocco.
It further pointed out that the minimum wage for public sector workers in Egypt was increased by 20%, starting from July.
Charges on most financial transactions were cancelled for an additional six months from the start of 2021, and further measures were undertaken to encourage lending.
“In Egypt, high frequency indicators suggest that the economy remains sluggish in the first half of 2021 despite an easing of lockdown restrictions,” the report read, “Fiscal policy is envisioned to be less accommodative this year following unprecedented support in 2020.”
It added that the average primary fiscal deficit is expected to be about 4% of GDP in 2021, about two-thirds its level in 2020.
“The scope for further fiscal support is limited by vulnerabilities related to rising debt from already high levels in a number of economies, including Bahrain, Egypt, Lebanon, Morocco, Oman, and Tunisia, and buffers used up following the oil price collapse of 2015,” the report added.
The report highlighted that oil importers are expected to grow by 2.8% in 2021, 0.2 percentage point slower than projected in January, as the pandemic undermines recoveries in several economies.
As caseloads are brought under control and restrictions are removed, growth should pick up further, to 3.8% and 4.2% in 2022 and 2023, respectively.
In Egypt, growth, having been solid in FY 2019/20, is expected to slow to 2.3% in FY 2020/21, starting in July, before strengthening again in FY 2021/22.