Egypt’s economy will sustain its 4.2 percent growth for fiscal year (FY) 2023/2024, according to US-based investment bank Morgan Stanley.
The forecast follows the Ministry of Finance’s announcement earlier this month that Egypt’s GDP had grown 4.2 percent in the previous fiscal year. In FY 2022/2023, Egypt’s revenues grew by about 12.5 percent, on the back of higher tax revenues at 23.1 percent.
The current projection is, however, slightly lower than Morgan Stanley’s earlier forecast of five percent.
Meanwhile, the World Bank had earlier trimmed Egypt’s growth forecast to four percent in the current fiscal year. However, it projected a slightly higher growth for Egypt at 4.7 percent in FY 2024/2025.
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Egypt’s economy
In addition, the World Bank estimates that workers in Egypt’s informal sector make up 62.5 percent of the labor force. According to government data, Egypt’s overall informal economy is approximately worth $127 billion.
Egypt’s Information and Decision Support Center (IDSC) estimates that about EGP 400 bn ($13 bn) are being lost annually in potential tax income from the informal sector.
For this reason, the government is aggressively pursuing its privatization programs and other initiatives. It is aiming to ‘formalize’ a bigger slice of its informal market to increase tax revenues.
Still optimistic
Despite Egypt’s GDP expected to grow moderately, experts are still optimistic about the country’s potential for future growth. At the start of FY 2023/2024, Egypt presented an ambitious budget plan that targets EGP 3 tn ($970 bn) in total expenditures.
The government hopes its strategy will lift up investor sentiment and stimulate further growth.
The recent depreciation of the Egyptian pound could also help boost Egypt’s competitiveness, according to the World Bank.
Growth is expected to be sustained in the services sector, mainly tourism and Suez Canal activity. Other notable industries with growth potential include construction and the finance sectors.
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