The numbers are lower than the agency’s previous expectations, where forecasted that Egypt’s GDP could reach 6% in 2022
International ratings agency, Fitch Solutions, expects Egypt’s real GDP growth to jump to 5% in the current fiscal year (FY 2021/2022), with it hitting 5.5% FY 2022/2023.
In its recent Middle East and North Africa (MENA) region monthly outlook report, Fitch projected Egypt’s real GDP to reach 3.1% in 2021 year-on-year, while average inflation is projected to hit 5.1% during the same year.
The numbers are lower than the agency’s previous expectations, where forecasted that Egypt’s GDP could attain pre-pandemic growth levels and reach 6% in 2022. Egypt’s June 2021 annual core inflation data, which excludes volatile items such as food, was recorded as 4.6%.
Fitch also expects Egypt’s interest rate to average at 9.25 percent and the US dollar to be traded at EGP 16.20.
“Egypt is a regional bright spot despite the slow vaccine rollout. The Egyptian economy is one of the few globally to have grown on an annual basis in the past year despite the COVID-19 crisis, meaning that the economy will far exceed its pre-pandemic size in 2021,” according to the report.
The agency adds that despite the slow vaccine rollout, the country’s mild restrictions causes less disruption for regular business activity.
“Meanwhile, fixed investments will benefit from a large project pipeline funded by both the public and private sectors. Indeed, the FY2021/2022 budget boosted capital expenditures by 60 percent,” said the report.
When it comes to the region, Fitch sees that the Middle East and North Africa could see GDP growth to rebound by 3.6% in 2021 after contracting by 4% in 2020. The number would be slightly above the 2011-2020 average growth rate of 2.7%, they added.
With that in mind, MENA’s regional economy’s size will not return to pre-COVID-19 levels in 2021, said the report.
The region, excluding Gulf Cooperation Council countries, is facing significant bottlenecks to the process of inoculation against the virus. The report added that counting on COVAX for vaccine procurement means significant delays to the vaccination process.