A recent report issued by the World Bank projected Egypt’s economy to grow at the fastest pace in the region, bolstered by a sharp recovery in investments.
The World Bank’s latest Global Economic Prospects report sees GDP growth in Egypt clocking in at the fastest pace of any country it covers in the Middle East and North Africa (MENA) region next year and the year after.
The report sees growth at 4.3% this year accelerating to 5.0% in 2018 and 5.3% in 2019, which is more than twice the pace it expects from the GCC countries.
The report forecasts Gulf economies to see an average growth of 1.8% this year and 2.8% in 2019.
Egypt is also expected to outpace the MENA region average of 2.2% this year and 3.2% in 2019.
“Egypt’s growth is expected to remain near 4% in fiscal year 2017 and strengthen in the two years thereafter, supported by the gradual implementation of business climate reforms and improved competitiveness, although high inflation weighs on near-term activity,” the report explained.
According to the report growth in MENA region remained subdued at 3.2% in 2016, due in part to the impact of low oil prices on the region’s key oil exporters’ growth. The Gulf Cooperation Council (GCC) economies are held back by these low oil prices and fiscal consolidation.
“Lower transfers from oil funds to general budgets were accompanied by tightened liquidity in the banking sector, which is reliant on public sector deposits, and has weighed on non-oil activity. Offsetting the slower growth in GCC oil exporters was stronger-than-expected growth in non-GCC oil exporters, due to rising oil production in the Islamic Republic of Iran following the lifting of sanctions, as well as improved security in Iraq,” the report explained.
For 2017, the World Bank sees growth in the MENA region continue to be held back by oil production cuts, fiscal consolidation, and regional conflicts.
“Production in the oil sector has declined in the first four months of 2017 as a result of the November 2016 OPEC production cut agreement. Oil production cuts in the first quarter of 2017 amounted to more than one million barrels a day relative to October 2016 levels. The largest cuts were implemented by Saudi Arabia, but compliance with OPEC mandates has been higher than expected across most oil exporters,” the World Bank’s report noted.