Egypt’s economy near-term outlook bright

The flotation of the Egyptian pound in November 2016 took its toll on Egypt’s economy. Yet, as fiscal consolidation slows and inflation and interest rates minimise, growth should remain robust over the next two years, according to Capital Economics’ MENA Economics Update report issued on Monday.

The report forecasted a 5.3-5.5% growth rate in the period between 2018-20, surpassing the performance of the Egyptian economy since 2011.

In 2017, the Egyptian economy witnessed its best performance in five years, growing 5% year-over-year. The report cites various drivers for the expected growth over the coming years.

These include a slower pace of fiscal consolidation. Although public finances remain dire, the authorities have made good progress reining in the budget deficit.

According to the IMF, the government is now on track to record a primary fiscal surplus for the first time in a decade. As the public debt-to-GDP ratio begins to drop, there should be room for the authorities to ease austerity measures.