World Bank expects Egypt to hit 2nd highest growth rate in MENA

CAIRO – 2 April 2019: The World Bank expected Egypt to achieve a growth rate of 5.5 percent during 2019, marking the second highest growth rate in the Middle East and North Africa region behind Djibouti, which tops the forecasts by 7 percent.

In a report about the economic outlook for the MENA region, the bank foresaw Egypt’s growth rate to hit 5.8 percent in 2020 and increase to 6 percent in 2021.

Meanwhile, Egypt’s 2019/2020 preliminary budget targets Gross domestic product (GDP) to hit about LE 6.163 trillion in 2019/2020 budget, compared to the expected LE 5.256 trillion of the current fiscal year. It also aims to increase growth rates to 6 percent, focusing on comprehensive inclusive growth.

The World Bank’s report also expected real GDP per capita growth to record 3.7 percent 3.7 percent in 2019, 4 percent in 2020, and 4.3 percent.

It anticipated current account balance to reach -2.5 percent pf GDP in 2019, and -2.6 percent in 2020, returning back to -2.5 percent in 2021.

Moreover, it thought that Egypt’s fiscal balance would record -8.6 percent, -7.5 percent, and -7 percent of GDP in 2019, 2020, and 2021, respectively.

“The World Bank anticipates that Egypt will be one of the top performers among MENA oil importers, with a growth rate forecast at 5.5 percent for 2019, the strongest since 2008,” the report read.

It elaborated that this strong performance is driven by rising natural gas production, revitalized tourism, and higher government investment spending. “Because rising revenues from VAT and income taxes have outpaced expenditures and subsidies have been cut several times, the fiscal deficit in Egypt has been narrowing for the past two years.”

It also noted that the state’s primary fiscal balance is expected to reach a surplus of 1.8 percent of GDP in 2019, clarified that the improvement in the fiscal accounts has also been aided by the improvement in growth itself. “This synergy between growth and fiscal reforms is expected to continue in the near term.”

According to the report, oil importers, as a group, are expected to grow 4 percent in 2019, up from a 3.8 percent growth in 2018, referring that tourists flocked back to the region, especially to Egypt and Tunisia.

The report stated that the uptick in tourism helped to modestly reduce trade imbalances and current account deficits.

In October, the World Bank expected Egypt’s growth to hit 5.6 percent during fiscal year 2018/2019, supported by private consumption, a recovery in tourism sector and the operationalization of recently discovered gas fields.

Regarding MENA region, World Bank economists expect economic growth to continue at a modest pace of about 1.5 to 3.5 percent during 2019-2021, with some laggards and a few emerging growth stars.

It explained that its expectation of real GDP growth in the MENA region to continue at a modest pace of 1.5 percent in 2019 on average down from an estimated growth of 1.6 percent in 2018, come under the clouds of weaker global growth and global financial-market volatility.

“The expected growth is led by developing oil importers, such as Egypt, which accounts for roughly 8 percent of MENA’s GDP. Gulf Cooperation Council (GCC) countries’ growth is expected to be stable while Iran’s economy is expected to contract further,” it stated.