A recovery in domestic demand, particularly private consumption, is forecast to sustain Egypt’s economic growth at 5.2% in 2019, according to the United Nations World Economic Situation and Prospects (WESP) 2019.
For 2019, the monetary policy stances are expected to be neutral to tightening in North Africa, including Egypt, following the trend of the United States and the euro area, the report estimated.
The report noted that external demand that drove the Egypt economy’s growth rate to 5.8% in 2018, is forecast to stay mostly favourable. It also warns that structural vulnerabilities, including weak fiscal and balance of payment positions, are projected to weigh on growth prospects.
Additionally, the International Monetary Fund (IMF) expected Egypt’s gross domestic product (GDP) to hike to 6% in the fiscal year 2022/23, from 5.5% in the current FY 2018/19 and 5.3% in FY 2017/18.
The GDP’s recovery reflects improvements in tourism, rising natural gas production, and increased confidence in the economy, due to the implementation of the economic reform programme, supported by the IMF’s Extended Fund Facility, according to a report from the IMF on in October 2018.
Beyond Egypt, the North Africa region is estimated to have grown by 3.7% in 2018, according to the WESP, adding that the recent economic expansion reflects improving external conditions with higher commodity prices and strong growth in European economies, the largest export destination. The economic growth of North Africa is forecasted to moderate slightly to 3.4% in 2019 and 3.5% in 2020.
The report mentioned that in 2018, balance of payment constraints on Egypt and Libya eased, which resulted in declining inflation rates and policy space to support domestic demand. The report sends alarm bills across the region, that political instability and social unrest also remain a downside risk factor in North Africa.
Meanwhile, the global economy will continue to grow at a steady pace of around 3% in 2019 and 2020 amid signs that global growth has peaked. However, a worrisome combination of development challenges could further undermine growth, according to the report.
UN Secretary-General António Guterres cautioned “While global economic indicators remain largely favourable, they do not tell the whole story.” He said the WESP 2019 “raises concerns over the sustainability of global economic growth in the face of rising financial, social, and environmental challenges.”