Fitch: Egypt’s Growth to Reach 4.5% until 2024 

As an emerging market, Egypt is expected to see a real slowdown in GDP growth from 2020 to 2024, to almost 4.5%, from 5% in 2015-2019, due to the implications of COVID-19, Cedric Chehab, Global Head of State Risks at Fitch Solutions.

Chehab said at an online seminar held by Fitch Solutions on Thursday to review its quarterly macroeconomic update, which was attended by Ahram Online, that Egypt is among the emerging markets whose fiscal deficit is expected to remain wide with about 10% of Egypt's gross domestic product until 2024 To be the first country among the emerging markets that suffer from this deficit.

He said that the emerging markets have shifted their focus, in the midst of the crisis, to monetary policies, which are programmed much smaller than in the developed markets, with a focus on the homogeneity of market differences, rather than the purchase of assets on a large scale.

“Although the markets have not yet responded negatively, we see significant risks in the long run. Chehab explained that given the weakness of financial institutions, and in some cases independence, excessive use of quantitative easing can lead to high inflation in emerging markets and weakness in currency.

According to the head of of State Risks, Brazil, India, Turkey, Thailand, Mexico and Russia, the largest emerging markets, are facing a sharp contraction, with the Manufacturing PMI dropping deep.

Amid fears of a second wave of the epidemic, Chehab explained that emerging markets now make up the majority of new cases, and there is a risk that the disease will become endemic in poorer emerging markets where the authorities cannot contain it.

He warned that the lack of access to health care services means fewer tests, diagnosis, treatment and quarantine, which is expected to affect growth and could delay the much needed recovery in these markets.

Global output is also expected to shrink by 3.6% in 2020, but a 4% recovery in 2021 is driven largely by developed markets, which will see a 5.1% drop in production in 2020 due to their weak fundamentals and low growth bases, According to Chehab.

Growth is expected to resume on a quarterly basis in the third quarter of 2020, but recovery will be difficult and erratic and the global economy will remain vulnerable to additional shocks. he said the risks look more balanced than before.