By Maha AbdelAzim
The World Bank’s biannual Global Economic Prospects Report released Tuesday predicted Egypt’s GDP growth rate to increase from an estimated 2% in 2013 to 2.2% in 2014 and 3.3% in 2016.
This expected growth rate would be the highest since 2010 (about 5.1%), but is still much lower than Egypt’s potential or pre-revolutionary growth rates.
The report stated that Egypt’s economy has been down in the past year, with GDP growth falling from 2.3% in 2012 to 2% in 2013, industrial output falling by 44% in three months through October, and a fall in foreign direct investment (FDI) net inflows by about 14.5%.
The Global Economic Prospects Report evaluates economic performance and predictions by region, with Egypt analysed under the Middle East and North Africa (MENA) region.
According to the report, exports, which had been declining in MENA oil-importing countries since 2013, have begun to recover, led by large gains in Egypt.
Tourism, however, “plunged dramatically” in several of these countries, especially in Egypt following Morsi’s overthrow, despite having “rebounded strongly” in the first quarter of 2013.
The report also stated that several oil-importing countries have faced widening current account deficits due to the decline in tourism and foreign investment flows caused by political turbulence.
In Egypt, “exceptionally high” bilateral borrowing from the Gulf has helped ease balancing pressures in 2013, but government debt as a percentage of GDP has increased as a result.
Fiscal policy in the region’s countries has remained expansionary, with the government launching a second stimulus package funded largely by aid from the Gulf. The government has also aimed at restructuring public sector financing, with a key law implementing a public sector minimum wage starting January.
The report generally expected the global economies to bounce back, led by developed countries but benefiting developing countries as well, although the global economy is still subject to risks such as increasing interest rates and falling per capita income in the eurozone.