At the beginning of every year the International Monetary Fund releases its global economic forecast. This year the news was rather positive; the IMF
forecasted the growth of the global economy and confirmed them for Egypt. The International Monetary Fund showed cautious optimism about the global economy, with the increasing opportunities arising from developing anti-Coronavirus vaccines, while maintaining its forecast for the growth of Egypt's GDP for the next fiscal year 2021/2022 at the rate of 5.5%.The IMF also confirmed in its latest report the global economy growth for the last fiscal year to be around 2.8%.
The Fund raised its forecast for global economic growth this year from 0.3% to 5.5%, while maintaining its 2022 growth estimate at 4.2%. In the Fund’s publication World Economic Outlook, it was noted that although recent vaccine approvals have raised hope for a positive development this year, waves of renewed infections and new virus mutations are raising concerns about the future state of the economy. Global growth in 2020 is estimated to contract by 3.5%, an improvement of 0.9% from what previously expected, reflecting stronger-than-expected momentum in the second half of 2020. The Fund expected an increase in the growth rate of the economies of the Middle East and Central Asia this year by 3%, compared to a decrease of 3.2% last year.
Also in this context, the results of a Reuters poll of the opinions of 20 economists showed that Egypt's economy will grow 2.8% in the fiscal year ending next June; the average forecast issued in October is much lower than the expected growth that was about 6% before the outbreak of the Coronavirus pandemic. The government said last November that it expects growth of 3.3% in the current fiscal year, slightly higher than the rate suggested by the poll. “The expected weakening of tourism revenues over the current fiscal year is the main constraint to the economy in our view,” said Monette Doss, an economic analyst.
The news is not as good on inflation, however. The average expectation is that the Egyptian pound will decline to 16.11 pounds per dollar by the end of 2021 and to 16.63 by the end of 2022 from 15.69 by the end of 2020. Interest is expected to remain at 8.25% in June 2022 and then rise to 8.5% by June 2023, according to the results of a Reuters survey, which is still a relatively high rate compared to the fixed income level of most Egyptians. Overall, the report’s findings are very reassuring, especially coming after a very tough year; but the question remains to what extent will that economic growth still be enough to compensate the losses most have made during most of the pandemic.