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World Bank revises Egypt’s FY 2021-22 growth forecast up to 6.1%

The World Bank has again revised upwards its projection for Egypt’s GDP growth by 0.6 percentage points to 6.1% for FY 2021-2022.

The bank in January expected growth to come in at 5.5%, but “stronger-than-expected activity for the first half of the fiscal year” saw it hike its forecast in its latest Global Economic Prospects report.

The forecast tallies with gov’t projections: The government has revised upwards its 2021-2022 growth outlook to 6.2% on the back of figures for 3Q 2021-2022, which saw the economy grow at a 5.4% clip. The

Planning Ministry had in March cut its full-year forecast to 5.7% due to the war.

The impact of war in Ukraine won’t be fully felt this fiscal year: The first half of the fiscal year (July-December 2021) saw a “boom” in growth that was “only partly offset by repercussions from the war in Ukraine,” the World Bank wrote. Growth began to slow in early 2022, the lender added.

Growth is set to moderate going into next fiscal year: The bank cut its forecast for Egypt’s growth next fiscal year to 4.8%, down from the 5.5% it predicted in January, as “rising food and energy inflation slows income growth and raises input costs in key sectors, and tourism flows moderate.” Inflation rose to a near three-year high in April as rising food costs and the devaluation of the EGP in March caused consumer prices to grow at a faster pace.

We’re vulnerable on food security, the WB notes: Our reliance on wheat imports from Russia and Ukraine (which usually account for more than 8% of our imported grain) exposes us to rising food prices, the report says. (Remember: We could soon be in line for some USD 500 mn from the World Bank for wheat imports and other food security measures).

On the upside: Gas exports + remittances will bring us a boost. Elevated prices in the gas extractives sector, remittances from the GCC, and “continued reform momentum” will support local growth looking ahead, the WB said.