By Mahmoud Mourad
CAIRO (Reuters) – Egypt’s economic growth will slow to 3.1% in the fiscal year 2020/2021 that began this month due to the coronavirus pandemic, a Reuters poll showed on Tuesday, down from 3.5% forecast in a similar poll three months ago.
The country’s economy had been boosted in the last three years by an upswing in tourism, strong remittances from Egyptian workers abroad and recently discovered natural gas fields coming onstream.
But since the coronavirus outbreak, tourism has collapsed, the price of gas has plummeted, and worker remittances have come under threat with the decline of oil revenues in Gulf Arab states, where many Egyptians are employed.
The government was expecting growth of 3.5% in the fiscal year 2020/21, which began in July, but growth could slow to 2% if the coronavirus crisis continues until year-end, Planning Minister Hala al-Saeed said in May.
The July 7-20 poll predicted Egypt’s gross domestic product (GDP) growth would recover in 2021/2022 to 5.0%.
“Egypt’s GDP in the first half of 2020/21 is expected to be negatively affected by the COVID-19 outbreak in Egypt with tourism, private investment and consumption being the main components negatively affected,” said HC Securities’ research team.
“As we go into FY 2021/22, we expect this negative effect to fade out and the economy to start capitalizing on the 2016-2019 economic reform,” they added.
The economists polled by Reuters expected Egypt’s annual urban consumer price inflation to slow to 7.0% in 2020/21, down from 7.5% expected in the previous poll. They predicted inflation would remain unchanged at 7.0% in 2021/22.
“Although the economy is slowly reopening, domestic demand conditions will likely remain subdued going forward as salaries are reduced and workers are laid off amid the economic downturn. This coupled with a relatively strong currency should keep inflation low in months to come,” said Callee Davis, an economist at NKC African Economics.
(For other stories from the Reuters global economic poll:)
(Reporting by Mahmoud Mourad; Polling by Md Manzer Hussain, Shaloo Shrivastava and Tushar Goenka in Bengaluru; Editing by Hugh Lawson)
