The World Bank said on Thursday it expected Egypt’s economy to grow by 5.8 percent this financial year, marginally lower than the government’s target of 5.9 percent. However, it is in line with the bank’s expectation six months ago.
The World Bank raised its growth estimate for Egypt’s gross domestic product (GDP) in the last financial year to 5.6 percent from 5.5 percent, matching the government’s figure. Egypt’s financial year starts on July 1.
“Egypt is sustaining its robust growth, fiscal outturns are improving, and external accounts are stabilising at broadly favourable levels,” the Washington-based institution said in a country note accompanying its regional economic update on Thursday.
The bank also forecasts growth to inch up to 6 percent in the financial year 2020/2021, assuming that macroeconomic reforms continue and the business environment improves.
The natural gas, tourism, wholesale and retail trade, real estate, and construction sectors have been the main drivers of growth, the World Bank note said. Net exports of goods and services grew, private investment increased, and unemployment decreased.
Yet, 39 percent of the working age population remains unemployed, the World Bank noted, “indicating relatively weak private sector job-creation”.
Rabah Arezki, World Bank chief economist for the Middle East and North Africa, said Egypt needs to “level the playing field” between the public and private sectors, especially when it came to access to credit.
Credit extended to private enterprise was only 22 percent of total domestic credit in financial year 2018/2019, the note showed.
“It is important for Egypt to consider the importance of competitive neutrality as a tool to catalyse a genuine private sector development,” Arezki told reporters on a conference call on Wednesday.
Analysts have praised a range of positive economic data in Egypt, including falling inflation, improving primary and budget balances, a strengthening currency, and decreasing debt.
“However, non-oil exports remain sluggish,” the note said. “FDI also remained modest and predominantly directed to hydrocarbons.”
