Egypt's GDP growth projected to hit 5.3pc by 2019, World Bank says

CAIRO: Egypt's gross domestic product is projected to grow 5.3 percent by 2019, suggesting the economy of the most populous Arab state is recovering after years of turmoil, the World Bank has said.

In its monthly Global Economic Prospects report for June, the Bank estimated Egypt's GDP would grow 3.9 percent in the 2016-17 fiscal year, which ends this month, in line with government expectations.

"Egypt's growth is expected to remain near 4 percent 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 said.

The bank sees the growth rate rising to 4.6 percent in the following year and 5.3 percent by the 2018-19 fiscal year, back to pre-2011 levels.

Egypt's economy has been struggling since a 2011 uprising drove foreign investors and tourists away. The government hopes a $12 billion International Monetary Fund loan programme, which includes a package of economic reforms, will put the country on the right track.

Foreign investment appetite has grown since the country floated its currency in November as part of the IMF agreement. Foreign reserves jumped to $31.126 billion at the end of May, nearing the pre-2011 figure of about $36 billion.

The currency float also helped to boost Egyptian exports, which became cheaper when the Egyptian pound halved in value, the report said.

However, inflation has skyrocketed since the flotation, reaching a three-decade high in April. It dipped in May, but economists forecast that cuts in fuel subsidies, expected this July, will send it back up.

Aimed to curb Egypt's budget deficit, the subsidy cuts will put more pressure on citizens whose savings have been halved by the currency float.