CAIRO: HC, a leading financial institution in the Middle East and North Africa, raised its forecast for Egypt’s economic growth Thursday to five percent during FY2015/2016, up from 4.3 percent, citing sizable investments in infrastructure, real estate, and tourism.
Data from the Central Bank of Egypt (CBE) showed that private investments grew by 26 percent y-o-y in real terms during the 1st quarter, as the gas sector posted a 6 percent growth, while manufacturing and real estate sectors grew by 17 and 33 percent, respectively, said HC’s Research Department.
“This comes as a positive surprise, as we previously anticipated that growth would have been primarily driven by government investments with early signs of a broader economic recovery,” HC’s Research Department said in its annual report.
In its April World Economic Outlook update, the International Monetary Fund (IMF) said Egypt’s economy is projected to grow by 4.3 percent in 2016, noting that lower oil prices will reduce Egypt’s vulnerabilities as a main oil importer in the Middle East.
Meanwhile, the fund has increased its forecast for Egypt’s economic growth in 2015 to 4 percent, from 3.8 percent in its previous assessment, citing “Egypt’s macroeconomic stabilization plans and wide-ranging structural reforms.”
HC said the forecast for a “broader recovery” was driven mainly by the $36 billion investment contracts, in addition to memoranda of understanding (MOU) worth $95 billion, signed during the Egypt Economic Development Conference (EEDC) in March.
It added that the energy, infrastructure, real estate, and tourism sectors will be key growth drivers, while Egypt’s energy-intensive industries may lag.
HC also raised FY2015/2016 real investment growth estimate to 8.3 percent, up from 3.9 percent, noting that energy shortages are unlikely to be a drag on the economy on the short-term.
Higher GDP growth could reduce unemployment to 11 percent in FY2016/17 from 12.9 in the 1st quarter of 2014/0515, HC predicted, adding that lower unemployment and higher consumer spending could push inflation rates up, posing upward interest rate pressures.