The International Monetary Fund (IMF) has upgraded its forecast for Egypt’s growth to 5.6% in fiscal year (FY) 2021/22, up from the 5.2% that had been projected in October 2021, according to Petya Koeva Brooks, the Deputy Director of the IMF’s Research Department.
Talking about the Egyptian economy, Brooks said that the economic impact has been well-managed, and that stronger data has been coming in, which is the main reason behind the IMF’s upgrade.
“At the same time, there is a lot of uncertainty about the impact of Omicron on the recovering tourist sector, so the hope is that the impact will be short lived,” Brooks added.
Her remarks came during a press briefing to release the IMF’s latest world economic outlook on Tuesday.
The report did not mention any projections for Egypt, however, it projected that the Middle East and Central Asia’s growth will increase slightly to reach 4.3% in 2022, up from the 4.1% previously expected in October, then it will decline to 3.6% in 2023.
“The main reason for this is the improved prospects for growth in oil exporters, which is again linked directly to the higher oil prices. When we look at the group of oil importers, we have unchanged numbers again as a group, but there is one country that stands out in that group of oil importers and that is Egypt,” Brooks explained.
“We project global growth this year at 4.4%, 0.5 percentage points lower than previously forecast, mainly because of downgrades for the United States and China,” Gita Gopinath, the Economic Counselor and Director of the Research Department explained.
“We expect global growth to slow to 3.8% in 2023. This is 0.2 percentage points higher than our projections in October 2021, and largely reflects a pickup after current drags on growth dissipate.”.
She added that the continuing global recovery faces multiple challenges as the pandemic enters its third year.
“The rapid spread of the Omicron variant has led to renewed mobility restrictions in many countries and increased labour shortages. Supply disruptions still weigh on activity and are contributing to higher inflation, adding to pressures from strong demand and elevated food and energy prices. Moreover, record debt and rising inflation constrain the ability of many countries to address renewed disruptions,” she added.
“Some challenges, however, could be shorter lived than others. The new variant appears to be associated with less severe illness than the Delta variant, and the record surge in infections is expected to decline relatively quickly. The IMF’s latest World Economic Outlook therefore anticipates that while Omicron will weigh on activity in the first quarter of 2022, this effect will fade starting the second quarter.”
She concluded that the forecast is subject to high uncertainty and risks overall are on the downside. The emergence of deadlier variants, however, could prolong the crisis.