World economies have been hard-hit owing to the COVID-19 outbreak. The impact of the pandemic is expected to overshadow the global economic outlook in 2021, if not in the following years as well, Ahram Online reported on Monday.
In its recent economic outlook report, the International Monetary Fund (IMF) projected the global economy to fall to three percent in 2020, down from 6.3 percent in January 2020.
“This is a major revision over a very short period. This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis. The world has changed dramatically in the three months since January. The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetime,” stated the report released during the IMF and World Bank spring meetings that concluded on Friday.
Egypt is not far behind. As one of the developing economies and emerging markets, Egypt’s real GDP growth is projected to fall to two percent in 2020, down from 5.6 percent in 2019, and is expected to rise slightly to 2.8 percent in 2021, according to the report.
Unemployment rates are expected to hit 10.3 percent in 2020, up from 8.6 percent in 2019, and to surge to 11.6 percent in 2021.
These indices reflect how Egypt’s economic activity and doing business will be affected during and after the pandemic.
Strategic consultant and market trends analyst Islam El-Saadany told Ahram Online that it is going to take 18 months for the coronavirus impact to be visible in the economic and business sectors around the world.
Under the coronavirus outbreak, El-Saadany said Egypt’s business activities are divided into “growing, slowing and half-dead sectors, each with its own challenges, yet with potentials that can help it survive and start over.”
The growing sector, according to El-Saadany, includes business activities such as medical supplies, commodity supplies, information and communication technology, food and retails, and e-commerce. The latter is witnessing a growth of between 300 to 500 percent.
In this regard, for instance, MENA’s healthcare market is projected to grow from $185.5 billion in 2019 to $243.6 billion in 2023, with an 11.7 percent compound annual growth rate at the constant exchange rate, according to Fitch Solutions recent report.
El-Saadany explained that this significant growth is owed to the COVID-19 outbreak that resulted in greater demand on the products that these activities provide.
The slowing sector includes activities such as financial services for banking and non-banking systems, auto trading, finance leasing, and real estate. The sector witnessed a reduction ranging from 30 to 50 percent as the COVID-19 outbreak forces consumers to rearrange their spending priorities and keep their financial positions because of economic uncertainty.
“The half-dead sector includes activities such as tourism and its related activities. The preventive measures the government has adopted to contain the COVID-19 outbreak, including halting air traffic and social distancing led to the creation of this sector,” said El-Saadany.
El-Saadany noted that all these sectors can benefit from the incentives that the government has provided to back economic activities and the private sector, including the EGP 100 billion initiative (two percent of GDP) and other decrees that government has issued in this regard.
One of the biggest challenges doing business is facing, however, is striking the balance between “surviving and maintaining the safety of workers,” said El-Saadany. He added that business owners will have to work on developing their businesses to deal with the high consumer selectiveness arising from the uncertainty caused by the COVID-19 crisis.
El-Saadany explained that the e-commerce, digital marketing, e-learning, hybrid-learning, online platforms, and delivery businesses are expected to rise to the top in the Egyptian market over the short and long terms, adding that all businesses, according to his analysis, will introduce new products that are more suitable for the market, but none of them is expected to resort to change their activities due to the economic challenges.
He said business owners should make use of the current chance to upgrade their employees’ skills and establish partnerships with old rivals to increase their revenues and provide products that consumers really need.
The challenges COVID-19 poses give rise to forge business alliances and partnerships to benefit from each other’s potentials and abilities to introduce more advanced products and services, and provide integrated solutions, said Osama Bekhit, founder and managing director of 365 Ecology, an energy solutions company.
Bekhit added that doing business in Egypt has immense potential, particularly because the COVID-19 outbreak has affected the business and economic activities in the countries that are major exporters to the Egyptian market, including China, the US, and a number of Arab countries.
“It is a significant opportunity for the domestic business and manufacturing sector to focus on providing local commodities instead of imported products, which will provide an ample room for domestic businesses to grow and face the current and expected challenges,” Bekhit said.
Teleworking is a solution that all business owners in Egypt should consider now and in the future, which will require adopting different work methods, setting different infrastructure, and arming employees with more advanced skills, according to Bekhit.
Due to the spread of the coronavirus, 365 Ecology, that employs 120 employees, has adopted teleworking, which resulted in a 10-15 percent reduction in the company’s expenses, Bekhit said, expecting that working from home may in the future decrease business expenses by 30 percent.
The majority of businesses are facing a slowdown but haven’t completely shut down. Industries and businesses in the aviation, marine, and tourism sectors have been affected the most and may even be subject to losses. However, with business revenues decreasing by an average of 30 percent, time is of the essence here, according to Bekhit.
“We know businesses have slowed down, and the only way we can continue to navigate these unchartered waters is to look at the full spectrum of outcomes. What are the implications? Cash flow is key to continuity, and at 365 Ecology we’ve started putting into action measures to help us build sustainable win-win situations with all our stakeholders,” Bekhit said.
The US Young Presidents Organisation’s (YPO) recent survey, released on Tuesday, found that 82 percent of business leaders expect declines in revenues over the next six months, while greater than half, 54 percent, anticipate revenues will be back to normal in a year’s time, with 61 percent of CEOs expecting their total fixed investments to remain unchanged year-on-year.
The survey, which was applied on around 2,750 CEOs across 110 countries, was conducted on 10-13 March 2020 by YPO, a global community of chief executives with approximately 28,000 members in more than 130 countries.
Among the industries seeing the greatest impact from the fallout are hospitality and travel (89 percent), education (87 percent), media and entertainment (80 percent), while production firms in agriculture, factories, mines and utilities reported some uptick in revenues, according to the survey.
Some 95 percent of business board members said they are adopting new measures to curtail the impact of the COVID-19, including communicating more regularly with employees (68 percent), taking new health and safety procedures (67 percent), cancelling major events (64 percent), and suspending business travel (53 percent), the survey revealed.
