Egypt: why is the IMF predicting increasing growth in 2022?

Why has the IMF raised its estimates for the growth of the Egyptian economy during in 2022? Ahmad Abdul-Rahman gives some likely reasons.


The International Monetary Fund (IMF) raised its estimates for the growth of the Egyptian economy to 5.6 per cent  for the current fiscal year 2022/2021, exceeding the recent estimates of the World Bank (WB) by 0.1 per cent. Hence, Egypt becomes the only oil-importing country in the Middle East with strong growth. 

Experts attributed the IMF's raising of its estimates for Egypt to the Egyptian government's launch of huge national projects such as the "'Decent Life Initiative"', and the increase in tourism revenues as a result of global celebrations organised in the country over the past year.
Economic expert, Abdel Moneim El-Sayed, head of the Cairo Center for Economic Studies, said that the IMF's expectations of an increase in the growth rate of the Egyptian economy means gross domestic product (GDP) will increase by 6.5 percent  to EGP 7.2 trillion for the current fiscal year.  He said this growth comes from an increase in the production of all goods and services, which reduces the unemployment rate. 

In exclusive statements to CNN in Arabic, El-Sayed also attributed the reasons for raising expectations regarding the growth of the Egyptian economy to the Egyptian government's launch of huge national projects, foremost of which is the "Dignified Life" project. This project is witnessing huge investment spending from the public and private sectors, including operating factories and companies.

In 2021, tourism saw revenues grow to USD 13 billion - three times more than in 2020 - to return to its previous levels, thanks to the organisation of international events and celebrations. The most important of these were the transfer of royal mummies, and the
opening of the Museum of Civilization. The aim of these events was to market the country as a tourist destination. In official statements, the Egyptian finance minister, Mohamed Muait also stated that the IMF raised its growth rate forecast because the country maximised its production capacities, expanded its export base, and provided new job opportunities. 

The uptick in the forecast also shows Egypt's success in dealing positively with the Corona crisis, he said. The government has
allocated a financial support package amounting to 2 per cent of GDP to support sectors and groups most affected by the pandemic.
Speaking separately, Egyptian Finance Minister Mohamed Muait commented on the World Bank report, stressing that the improvement came as a result of the good management of the repercussions after the outbreak of the Corona virus pandemic, as well as the positive economic
performance of the economy. Muait also said that the economic reform programme contributed to strengthening the structure of the national economy, mitigated the severity of the pandemic, and contained its negative effects.

An economic expert, Abdel Moneim El-Sayed, head of the Cairo Center for Economic Studies, said that the IMF's expectations of an increase in the growth rate of the Egyptian economy to 5.6 per cent during the fiscal year 2022/2021 which means an increase in the size of GDP to EGP 7.2 trillion. This growth comes from an increase in the volume of production, whether production of goods or services, which reduces the unemployment rate, in addition to a positive impact on inflation, as well as an increase in exports.

In official statements, the Finance Minister stated, that the IMF's raising of its growth rate forecast indicates the importance of maximising production capacities, expanding the export base and providing job opportunities. This also shows Egypt's success in dealing positively with the Corona crisis, he said. The government has allocated a financial package amounting to 2 per cent  of GDP to support the sectors and groups most affected by the pandemic.

In 2021, tourism also achieved a growth in revenue of USD 13 billion - three times more than in 2020 - to return to its previous levels,
thanks to the organisation of international events and celebrations. The most important of these ceremonies are the transfer of royal
mummies, and the opening of the Museum of Civilization. The aim of these events was to market the country as a tourist destination.

Another reason for  for the growth of the Egyptian economy is the expected improvement in industrial production, after the government has established 17 industrial zones, 13 of which were opened over the past five years. The importance of these zones lies in not only in increasing industrial production, but employing more workers as well as opening new export markets. The volume of Egyptian exports increased in the latest fiscal year, to over  USD 31 billion up from USD 25 billion in 2020  which - achieved the highest rate since measurements began. 

Positive growth in the expectations for the growth of the Egyptian economy will be reflected in the improvement of Egypt's credit rating, and the continued assistance of  international institutions. This is in addition to attracting more foreign direct investments, and encouraging sovereign wealth funds, companies and foreign investors to invest in Egypt. Egypt attracted foreign investments amounting to USD 5.9 billion in 2020, ranking second as the most investment-receiving Arab country. 

Ahmed Abu El-Saad, a member of the board of directors of the Egyptian Stock Exchange, said that it was expected that the IMF
would raise its growth forecasts for Egypt. He pointed to the importance of the IMF's expectations of an improvement in the Egyptian economy, while predicting predicted lower growth rates for countries such as the US and China. This indicates that Egypt's
economic activity is progressing, he said.


He added, in exclusive statements to CNN in Arabic, that the positive expectations for the growth of the Egyptian economy are
being promoted to international organisations and reflect the strong development growth  the country is witnessing.

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Sunday, 25 September 2022