A recovery in domestic demand, particularly private consumption, is forecast to sustain Egypt’s economic growth at 5.2 per cent in 2019, according to the United Nations World Economic Situation and Prospects (WESP) 2019, which was launched yesterday.
For 2019, the monetary policy stances are expected to be neutral to tightening in North Africa, including Egypt, following the trend of the United States and the euro area, the 224-page report estimates.
While the report notes that external demand that drove the Egypt economy’s growth rate to 5.8 per cent in 2018, is forecast to stay mostly favorable, it also warns that structural vulnerabilities, including weak fiscal and balance of payment positions, are projected to weigh on growth prospects.
Beyond Egypt, the North Africa region is estimated to have grown by 3.7 per cent per cent in 2018. The recent economic expansion reflects improving external conditions with higher commodity prices and strong growth in European economies, the largest export destination. The economic growth of North Africa is forecast to moderate slightly to 3.4 per cent in 2019 and 3.5 per cent in 2020.
While noting that in 2018, balance of payment constraints on Egypt and Libya eased, which resulted in declining inflation rates and policy space to support domestic demand, the report sends alarm bills across the region, that political instability and social unrest also remain a downside risk factor in North Africa.
Meanwhile, the global economy will continue to grow at a steady pace of around 3 percent in 2019 and 2020 amid signs that global growth has peaked. However, a worrisome combination of development challenges could further undermine growth, according to the report.
UN Secretary-General António Guterres cautioned “While global economic indicators remain largely favourable, they do not tell the whole story.” He said the World Economic Situation and Prospects 2019 “raises concerns over the sustainability of global economic growth in the face of rising financial, social and environmental challenges.”
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