Growth slowed 1.4 percentage points last fiscal year: GDP growth for the fiscal year 2023-2024 came in at 2.4%, according to data(pdf) from the Planning, Economic Development, and International Cooperation Ministry. The figure represents a 1.4 percentage point drop from the 3.8% growth rate recorded during the previous fiscal year.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Driving the decline: The lower GDP growth rate came as geopolitical tension and volatility in the global economy put pressure on the Egyptian economy, particularly with “the government’s contractionary policies aimed at restoring macroeconomic stability — strengthening the governance of public investments being a key policy,” the report read. Suez Canal activity was a particularly important factor, with activity dropping 30% y-o-y in FY 2023-24

The extraction sector also experienced a decline of 4.7%, primarily driven by reduced oil and gas production, which the ministry attributed to ”a decline in foreign investments in new well discoveries, as well as a slowdown in the development and enhancement of existing wells.” However, the gradual clearing arrears to foreign oil and gas players over the past few months has already begun to reverse this trend, it added.

Things should be shaping up soon: The government is currently in talks with foreign partners over a new set of incentives for the oil and gas industry that aim to boost oil and gas production and reduce the growing gap between energy supply and demand.

The manufacturing sector didn’t fare much better: The sector — which contributes somewhere around 11.4% to the overall GDP — contracted by 5.2% during the year, which was attributed to a shortage in raw materials. The industries that experienced the worst declines were metals (42%), tobacco (38%), wood products (31%), paper (18%), chemicals (8%), food products (7%), and pharma (7%).

These drops were offset by growth in other sectors, including information and communications technology, tourism, wholesale and retail trade, transport and storage, and social services, including education and health.

On a 4Q basis: The economy grew at a 2.4% clip during the final quarter of the fiscal year driven by a 68% dip in Suez Canal activity. Also to blame: the extraction sector fell by 6.3%, with oil and gas production falling by 4.4% and 15.3%, respectively. Petroleum refining activities fell 8.7%.

Things have been looking up for some sectors since March: The economic reforms taken during March 2024 — including a jumbo interest rate hike and the float of the EGP — led the manufacturing sector to record a positive growth rate of 4.7% for the first time since the first quarter of FY 2022-23, with growth seen in the garment, computing and electronics, textiles and

beverage sectors in particular. A number of other sectors saw improved growth rates following the government’s decisions, including the construction, CIT, wholesale and retail trade, transport and storage, as well as the financial intermediation sectors.

What about this year? The government currently sees the economy growing at a 4.0% clip this fiscal year, Planning, Economic Development, and International Cooperation Minister Rania Al Mashat said at a press conference on Thursday.

WHAT TO EXPECT MOVING FORWARD-

Gov’t lays out near-term plans for ongoing projects + investment goals: Al Mashat laid out what the ministry has in store for a number of government projects and investment goals in the coming period, as well as laws that the ministry is in the process of finalizing, according to a number of statements shared on the cabinet’s Facebook page (here, here, here, and here).

#1- Unified Planning Law nears completion: The government is in the process of completing the executive regulations for the General Unified Planning Law and “activating it to enhance the use of comprehensive data analysis and direct investments towards priority sectors,” Al Mashat said. The law aims to improve policy coherence and resource allocation based on comprehensive assessments of sector needs and available opportunities — which, in turn, would direct investments towards the sectors most capable of achieving growth, she continued.

Remember: President Abdel Fattah El Sisi ratified the law in 2022 shortly after the House gave it its final nod in early 2022. At the time, the law was described as a way to dictate how governorate-level economic, social, and urban development plans are financed and implemented. It would also seek to diversify funding for development projects by encouraging more public-private partnerships.

#2- FDI strategy in the works: The ministry is also working alongside other ministries to finalize Egypt’s FDI strategy and the World Bank to finalize the Trade and Industry Strategy as part of a wider effort to bring in additional investment and further economic development, Al Mashat said.

Reuters also had the story.

Tags: