Egypt: Economic growth slows slightly in the first quarter of FY 2019
November 16, 2018
According to an announcement by the Ministry of Planning and Administrative Reform on 16 November, GDP increased 5.3% in July–September (Q1 FY 2019) compared to the same three months a year earlier. This is slightly below the 5.4% growth rate achieved in April–June (Q4 FY 2018). Although comprehensive data is not yet available, the largest sectoral contributions to growth in Q1 came from the natural gas, wholesale and retail, agriculture, and telecommunications sectors.
The slight deceleration in economic growth was reflected by most macroeconomic fundamentals. Inflation accelerated in Q1, averaging 14.6% compared to 13.0% in Q4, which likely weighed on the expansion. Moreover, the unemployment rate edged up to 10.0% in Q1 (Q4 FY 2018: +9.9%), while annual industrial production growth slowed markedly to 3.0% (Q4 FY 2018: +8.2%). Meanwhile, the average non-oil private sector PMI remained in contractionary territory, although inched up to 49.8 in Q1 compared to 49.6 in the previous quarter.
Looking ahead, the economic outlook appears bright this fiscal year. Although inflation has picked up recently on the back of energy subsidy cuts and higher food prices, it is expected to moderate going forward. In addition, higher salaries and pensions in the public sector—effective as of July 2018—will likely support private consumption. Meanwhile, investment should continue to benefit from recent reforms to improve the business environment, coupled with higher government investment spending.
Author: Edward Gardner, Economist