The World Bank lifted its expectations of Egypt’s gross domestic product (GDP) to record 5.3 in 2017/2018 and 5.7 percent in 2018/2019, with an increase of 0.4 percent and 0.1 percent, respectively.
The World Bank anticipated in its report "Global Economic Prospects ... The Turning of the Tide?" that GDP in Egypt would reach 5.8 in 2019/2020.
The World Bank forecasted earlier in the report of the Economic Observatory for the Middle East and North Africa that Egypt will record a growth rate of 5 percent in 2018, and 5.5 percent in 2019 to reach 5.8 percent in 2020.
The report added that inflation has subsided substantially in 2018, falling to 13 percent in April from a peak of more than 30 percent in July 2017, allowing the central bank to implement two interest rate cuts this year to support activity.
The Central Agency for Public Mobilization and Statistics (CAPMAS) announced that the annual consumer price inflation slipped to 13.1 percent in April 2018, compared to 13.3 percent in March.
The Monetary Policy Committee of the Central bank of Egypt lowered the interest rates twice earlier this year by 1 percent each time.
On March 29, the committee set the overnight rate and the overnight lending rate at 16.75 percent and 17.75 percent, respectively. In February, the committee lowered the interest rates by 1 percent for the first time since the flotation of the Egyptian currency in November 2016, after inflation rates slowed down.
Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT) and cutting energy subsidies, all with the aim of trimming the budget deficit.
The country floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF). The IMF Executive Board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.
In December 2017, Cairo received the third $2 billion tranche of its loan, bringing total disbursements to $6.08 billion. The $2 billion fourth tranche will be received by Cairo after concluding the program’s third review in June.
For MENA, the bank forecasted GDP to rise to 3 percent in 2018, and to rise slightly higher in 2019-2020, assuming continued policy reforms and oil prices remaining above their 2017 average.
“In 2018, growth in oil exporters is expected to rise substantially to 2.7 percent due to additional government spending, enabled by increased domestic revenues and firm oil prices,” according to the report.
Globally, the World Bank expected global growth to reach 3.1 percent in 2018, anticipating it to edge down over the next two years as global slack dissipates, trade and investment moderate, and financing conditions tighten.
It also expected emerging markets and developing economies to achieve a GDP of 4.5 percent in 2018 and 4.7 percent in both 2019 and 2020.