Egypt’s GDP to grad­u­ally in­crease by 5.8% in FY2019/20: World Bank

GROWTH IN MENA EX­PECTED TO RE­BOUND TO 3.1% IN 2018

The Daily News Egypt - - News - By Ha­gar Om­ran

Eco­nomic ac­tiv­ity in Egypt will im­prove and im­bal­ances will nar­row fur­ther, said the World Bank (WB) in a state­ment re­leased Mon­day, adding,“real GDP will grow by 5% in FY 2017/18, and grad­u­ally in­crease to 5.8% by FY 2019/20”.

The state­ment men­tioned that the growth is ex­pected to be driven by re­silient pri­vate con­sump­tion and in­vest­ment, in ad­di­tion to a prob­a­bil­ity of a grad­ual pickup in ex­ports,no­tably from the tourism and gas sec­tors.

The Min­istry of Fi­nance an­nounced in April that it aims to achieve growth in GDP of 5.8% in FY 2018/19.

Fur­ther­more, ex­treme poverty in Egypt is prac­ti­cally erad­i­cated, where-by us­ing the na­tional poverty thresh­old, about a third (27.8%) of the pop­u­la­tion was be­low the poverty line in 2015. More­over, the high in­fla­tion ac­cu­mu­lated over the course of FY 2014/15 to FY 2016/17 has low­ered the pur­chas­ing power of house­holds across so­ci­etal seg­ments, re­duc­ing the pos­i­tive spill overs of eco­nomic growth, and tak­ing a toll on so­cial and eco­nomic con­di­tions.

Re­gional dis­par­i­ties con­tinue to be part of the coun­try’s land­scape, with ru­ral Up­per Egypt show­ing poverty rates three times as high as metropoli­tan Egypt, said the state­ment.

The state­ment added that re­cent in­creases in al­lowances of the main so­cial pro­grammes have helped weather the ef­fects of in­fla­tion, but im­per­fect cov­er­age and tar­get­ing leave some groups un­pro­tected.

Mean­while, the WB said in its lat­est Mid­dle East and North Africa Eco­nomic Mon­i­tor that eco­nomic growth in the MENA re­gion is pro­jected to re­bound in 2018, thanks to a pos­i­tive global out­look, oil prices sta­bil­is­ing at rel­a­tively higher lev­els, and sta­bil­i­sa­tion poli­cies and re­forms.

Growth in the MENA re­gion is ex­pected to re­bound to 3.1% in 2018, fol­low­ing a sharp decline to 2% in 2017 from 4.3% in 2016, added the WB, not­ing that the in­crease in growth is broad-based and al­most all coun­tries will ex­pe­ri­ence an uptick this year.

The WB said that the good per­for­mance by Gulf Co­op­er­a­tion Coun­cil coun­tries will grow oil ex­ports by 3% in 2018, dou­ble their rate in 2017.

“There are grounds for op­ti­mism,” said Hafez Ghanem, WB vice pres­i­dent for the Mid­dle East and North Africa re­gion, adding,“now is the time to fo­cus on cre­at­ing more jobs and eco­nomic op­por­tu­ni­ties for youth. The pos­i­tive out­look is an op­por­tu­nity to speed up re­forms for a re­newed pri­vate sec­tor as an en­gine of growth and job cre­ation.”

Geopo­lit­i­cal ten­sions, the chal­lenges posed by the forcible dis­place­ment of peo­ple, in­clud­ing refugees, and the ris­ing level of debt in the re­gion could cloud the pos­i­tive out­look, added the state­ment.

“While sta­bil­i­sa­tion poli­cies have helped economies ad­just in re­cent years,” the re­port said, “a sec­ond phase of re­forms is needed that should be trans­for­ma­tive if the re­gion is to reach its po­ten­tial. In­deed, the cur­rent growth tra­jec­tory is markedly be­low that po­ten­tial and in­suf­fi­cient to ab­sorb the hun­dreds of mil­lions of young peo­ple who will en­ter the labour mar­ket in the com­ing decades. In this re­port, we ex­plore the role that pub­lic-pri­vate part­ner­ships can play,not only in pro­vid­ing an al­ter­na­tive source of fi­nanc­ing, but in help­ing change the role of the state from the main provider of em­ploy­ment to an en­abler of pri­vate sec­tor ac­tiv­ity.”

“Stud­ies have shown that the gap be­tween MENA economies and fast­grow­ing ones is the per­for­mance of the ser­vices sec­tor,” the re­port con­tin­ued. “Rapid tech­no­log­i­cal change of­fers new op­por­tu­ni­ties for boost­ing pri­vate-sec­tor-led growth through en­hance­ment of high-tech jobs in the ser­vices sec­tor. For each job cre­ated in the high-tech sec­tor, ap­prox­i­mately 4.3 jobs are cre­ated across all oc­cu­pa­tions and in­come groups.The MENA re­gion has a fast-grow­ing pool of univer­sity grad­u­ates, a heavy pen­e­tra­tion of so­cial me­dia, and smart­phones. Com­bin­ing them could serve as the foun­da­tion for a dig­i­tal sec­tor that could cre­ate much-needed pri­vate sec­tor jobs for the youth over the next decade. Sev­eral MENA coun­tries have de­vel­oped strate­gies to trans­form their economies and take ad­van­tage of dis­rup­tive tech­nol­ogy, but more is needed to cap­ture the op­por­tu­nity.”

The re­port also shows how ex­ter­nal forces are dis­rupt­ing var­i­ous mar­kets, in­clud­ing those for en­ergy, which ex­poses MENA coun­tries to new risks, in­clud­ing of stranded as­sets.

The WB said that the good per­for­mance by Gulf Co­op­er­a­tion Coun­cil coun­tries will grow oil ex­ports by 3% in 2018, dou­ble their rate in 2017

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