The European Bank for Reconstruction and Development (EBRD) raised its growth forecast for Egypt's economy to 4.9 percent during the financial year 2021-2022. According to its Regional Economic Prospects (REP) report released on Thursday, EBRD said Egypt's economy is expected to pick up "sustained by a boom in the telecommunications sector as well as a pickup in private consumption and investment and the return of foreign direct investment." However, the bank said risks include a slow uptake of COVID-19 vaccination and a weak outlook for the tourism sector in view of a likely delay in the global recovery of tourism. In its report, EBRD has raised its growth forecast for the southern and eastern Mediterranean (SEMED) region to 4.2 percent for 2021. "Output in the southern and eastern Mediterranean is expected to grow by 4.2 percent in 2021 and 4.4 percent in 2022, reflecting strong pick-up in economic activity in Egypt, in particular in the second quarter of 2021." EBRD report read. On a calendar year basis, EBRD said Egypt's economic growth is forecast to recover to 5.3 percent in 2021, from 1.5 percent in 2020, before moderating to 5.0 percent in 2022." Egypt's economic growth slowed from 3.6 percent to 3.3 percent in the financial year ending June 2021, on the back of sluggish manufacturing activity and weak tourism which offset the economic activities of the wholesale and retail trade, construction, agriculture, and telecommunications sectors. Inflation slowed to 4.5 per cent in the same financial year, below the central bank's target, and began to increase in the period July to September 2021, averaging 5.9 per cent year-on-year, driven by increases in the prices of food and beverages, EBRD added. For the SEMED region, EBRD said the recovery in economic activity has started in most economies of this region, mainly "driven by a rebound in the agriculture and telecommunications sectors as well as limited growth in tourism and exports." The bank further said the future economic rebound would depend on the strength of the global recovery, progress in the vaccination rollout, political developments and the implementation of reforms to the business environment. The report names increasing competition, improving governance, combating corruption, advancing digitalisation and promoting inclusion as key steps to attracting investors. "For 2022, output in the SEMED region is expected to grow by 4.4 percent, reflecting a strong pickup in economic activity, notably in Egypt and Morocco."
