Regional Report by Corinne Denin, Regional Manager, Infosource
Real GDP growth in Egypt reached 5.6% in 2019, up from 5.3% a year earlier. This improving situation was largely driven by exports, with a corresponding contraction of oil imports as a result of an increase in natural gas production. Private investment is also picking up. Apart from gas, tourism, wholesale and retail trade, real estate and construction have been the main drivers of growth.
Assuming a continuation of macroeconomic reforms and a gradual improvement in the business environment, economic growth was expected to reach 6% in 2020, supported by a recovery in private consumption, investments and exports (notably in tourism and gas).
However, the advent of the coronavirus is currently undermining Egypt’s recovery, not just in terms of its disruptive impact generally but more so in terms of sharply reduced global demand. Tourism especially is impacted very heavily by the international travel bans in place since March and which are unlikely to be lifted until late June.
In March, the government announced the allocation of EGP100 billion as an emergency response package. The government has introduced a number of fiscal measures: increasing wages and pensions by 14% as from the next financial year, cash payments to 1.5 million low wage workers impacted by the coronavirus outbreak, and decreasing taxes. Compared with that of most developed economies, Egypt has chosen the path of a looser lockdown, unavoidable in view of the impossibility of social distancing in such a crowded and chaotic capital as Cairo. As in most of Africa however, the infection and mortality rate of the coronavirus is well below that of the rest of the world.
To date the Copier MFP business has been continuing its usual ups and downs, sliding from an all-time high of 70.5k units in 2014, dropping to a 10 year low of 26k units in 2017 with the drastic devaluation of the Egyptian Pound, recovering somewhat in 2018 to 37k then sliding in 2019 to 34k units. But this is likely to change considerably for the worse during Q2 as product shortages make themselves felt, tourism drops off steeply and the economy begins to suffer. Already Q1 is down 14% compared with Q1 a year earlier.
2020, as in most other parts of the world, will likely be remembered as the worst performing year since the second world war. Thankfully the outbreak has not been a long one – unless efforts to prevent a second wave are unsuccessful – but it has been severe. Egypt has, at the time of writing, suffered a relatively low number of cases but the country will still suffer from the effects in the rest of the world and especially with its main trading partner China.