Egypt may become the only growth economy in the Middle East
Release time:
2020-06-05 00:00
Egypt may become the only growth economy in the Middle East
Source: People's Daily, June 03, 2020, 17th edition.
Reporter: Zhou
The four pillars of Egypt's economy, oil, tourism, the Suez Canal and remittances, have all been hit hard during the neo-coronary pneumonia epidemic. The World Bank has said it will provide a $50 million loan to Egypt to help implement emergency medical measures and strengthen its economic resilience. The Executive Board of the International Monetary Fund (IMF) also approved about $2.77 billion in loan assistance to Egypt to help it cope with the impact of the epidemic.
Although the epidemic has exposed the structural weakness of the Egyptian economy's dependence on foreign investment, many international institutions believe that Egypt is still on track to become the only economy in the Middle East that can achieve economic growth this year. The World Bank and Fitch, an international rating agency, forecast economic growth for Egypt this year at 3.7 percent and 4.1 percent, respectively. The European Bank for Reconstruction and Development recently released the "Regional Economic Outlook" report, predicting that Egypt's GDP growth rate for the 2020-2021 fiscal year will be 3%.
According to Jihad Azul, Director of the IMF's Middle East and Central Asia Regional Department, Egypt's economic reform programs implemented in recent years have strengthened Egypt's ability to withstand the impact of the epidemic. In 2016, in the face of rising public debt, deteriorating balance of payments and a severe shortage of foreign exchange, the Egyptian government introduced a number of measures to stimulate economic growth: it issued Vision 2030 and signed a $12 billion loan agreement with the IMF. The Egyptian government has launched a three-year economic reform plan, including measures such as cutting subsidies, increasing taxes and implementing a floating exchange rate for the Egyptian pound.
The reform plan has achieved remarkable results. Egypt's inflation rate and fiscal deficit have fallen, foreign investors' confidence in the Egyptian economy has rebounded, and fiscal and balance of payments pressures have been eased. In the 2018-2019 fiscal year, Egypt's economy grew by 5.6 percent, the highest growth rate in 11 years. The increasingly stable social environment has also attracted more tourists. In 2019, Egypt's tourism revenue reached a record high of US $13.03 billion billion; Suez Canal revenue reached a record US $5.9 billion. Foreign exchange reserves grew from $19.5 billion in October 2016 to about $45.5 billion in February this year.
After the outbreak, Egyptian President Sisi announced the allocation of 100 billion Egyptian pounds (about 45 billion yuan) to fight the epidemic and provide subsidies to low-income groups and industries severely affected by the epidemic. The Egyptian Parliament has passed a number of legal amendments that allow the government to reduce or exempt corporate real estate taxes, allow companies to pay social insurance in installments and reduce personal income taxes.
Hiber Jamal, a researcher at the Egyptian National Planning Institute, told our reporter that Egypt supports the development of small and medium-sized enterprises while preventing and controlling the epidemic, and Europe's demand for light industry and agricultural products will become a development opportunity for Egyptian enterprises. Egypt's economy will continue to improve in the post-epidemic era. First of all, Egypt's population under the age of 25 accounts for nearly 50% of the total population, and can recover from the epidemic faster than countries with a large elderly population. At that time, the income of Egyptian overseas remittances will once again see growth. Secondly, the epidemic will slow down conflicts in the region and promote greater cooperation among countries in the region. Egypt has obvious advantages in terms of geographical location and population structure, which is expected to drive the economic recovery of the Middle East.
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