Egypt: Economic growth remains robust in October–December 2019
May 11, 2020
The economy expanded 5.6% year-on-year in the second quarter of FY 2020 (October–December 2019), which was unchanged from the growth rate of the first quarter.
Private consumption growth accelerated to 2.7% in October–December (July–September: +1.0% year-on-year), seemingly supported by lower inflation and cuts to the overnight deposit rate by the Central Bank, and despite an uptick in the unemployment rate to 8.0% from 7.8%. Meanwhile, government consumption expanded 6.8% in October–December, up from 4.0% in July–September. Less positively, total investment growth slowed to 10.4% in the three-month period ending December, down from 22.2% in the three-month period ending in September, despite interest rate cuts.
On the external front, exports of goods and services decreased 14.1% in October–December, after falling 9.7% in July–September, while imports fell 14.0%, after dropping 11.3% in July–September.
Going forward, forecasts from both the government and FocusEconomics Consensus Forecast panelists point to a clear economic deterioration from January 2020, most notably from March, when Egyptian authorities began imposing containment measures to reduce the spread of coronavirus, which included the suspension of flights and the temporary closure of most businesses. However, fiscal and monetary policy stimulus should moderate the downturn.
Author: Edward Gardner, Economist