Fitch Solutions predicts that Egypt is among five emerging markets that may not witness recovery in their tourism sector in 2021 amid COVID-19 repercussions
This came within Fitch Solutions’ global macroeconomic update report, adding that these struggling markets include Egypt, Turkey, Thailand, South Africa and Vietnam.
The report also excluded Egypt from the markets that are expected to see positive indices in 2021 regarding inflation, commodity prices, reforms and the vaccines’ roll out.
Fitch Solutions expects the global economy to grow by up to 5.6 percent in 2021.
However the report sees emerging market economies will strengthen after a painful 2020.
It sets six key themes that are expected to shape the recovery in emerging markets, adding that many emerging markets will falter in the first quarter of 2021 before gaining strength later in the year.
Moreover, the pace of vaccine rollouts will determine the pace of economic normalisation, while commodity prices will mostly boost oil exporters during 2021, but provide little support elsewhere.
According to Fitch Solutions, fiscal policy will normalise faster in emerging markets than in developed markets meanwhile, the emerging markets’ monetary policy is expected to remain loose in 2021 and 2022.
They also stressed that the COVID-19 shock will create lasting damage across emerging markets, though the scale will vary significantly.
On the positive side, Fitch expected manufacturing output, which grew strongly in most emerging markets in late 2020, and is to continue in 2021 especially, with the activity rising in January 2021 in most of these economies.
The latest Purchasing Managers Indices (PMI) also point to strong performances in February, according to Fitch.
However, Fitch mentioned that retail figures suggest that consumer-facing sectors continued to falter in early 2021, driven by the lockdown measures and consumer fears that continue to weigh on spending in most countries.
Emerging markets’ consumers remained pessimistic in the first two months of 2021, according to Fitch.
It also expected retail sectors to continue to underperform manufacturing sectors as long as, vaccination rollouts remain limited and prevent the re-opening of economies.
Fitch also expected the gradual vaccines’ roll out to slow down the recovery process in emerging markets in the first half of 2021.
