End of year GDP growth a weak 1.3 percent

Egypt’s economy grew by just 1.3 percent year-on-year during October–December 2013. According to figures released today by the Ministry of Planning this follows an even weaker quarter, from July–September 2013, during which year-on-year GDP growth was just shy of one percent, bringing average growth for the first half of the 2013/14 fiscal year to just below 1.15 percent.

The 2012/13 financial year saw GDP growth of around two percent.

In its March Financial Bulletin the Ministry of Finance attributed slow growth to “security reasons and political developments.”

Economists generally estimate that Egypt needs to maintain a growth rate of some six to seven percent for employment to keep pace with Egypt’s rapidly growing population. Approximately half a million Egyptians enter the job market each year, and official figures placed unemployment at 13.4 percent at the end of 2013.

Former Minister of Finance Ahmed Galal came into office in July 2013, predicting GDP growth of three percent for the current financial year. Egypt’s new Finance Minister Hany Qadry last month revised that forecast to two to 2.5 percent growth.

Qadry's prediction is in-line with estimates from the International Monetary Fund’s April 2014 World Economic Outlook released on April 8. The report predicted Egypt would see GDP growth of 2.3 percent in 2014, a downward revision from the 2.8 percent growth it had predicted in its October report.

“Political uncertainty will continue to weigh on tourism and foreign direct investment, notwithstanding the fiscal stimulus supported by GCC financing,” the report said of Egypt. “Large imbalances will persist unless structural reforms and fiscal consolidation are initiated.”

The IMF placed Egypt’s growth rate below other oil importing economies in the Middle East and North Africa, which the IMF estimated would see an average growth rate of three percent this year, although it is predicted to outperform Lebanon, whose economy is projected to grow by just one percent this year.

Overall, the IMF forecasts that global economic growth will average by 3.6 percent this year, up from three percent in 2013.