Mohieldin Explains Reasons for Global Inflation during EES 2021

Mahmoud Mohieldin, Executive Director of the International Monetary Fund (IMF) participated in the activities of the third edition of the Egypt Economic Summit (EES), which was held under the patronage of PM Mostafa Madbouly, and was attended by a large number of ministers, officials, specialists in the economic field, and a number of businessmen.

Mohieddin said that the global economy was expected to have growth rates of 6%, but that according to reviews of a number of international institutions, the growth rate reached 5-5.9%, and there is another revision that may bring the growth rate to a lower level; for reasons related to the pandemic, and the recent development accompanying it, with the emergence of the Omicron mutant, in addition to the problems related to global supply chains, which led to an inflationary wave.

The executive director added that the biggest problem with inflation is related to middle-income countries, which constitute a third of the world's economy and comprise 75% of its population, and 62% of the world's poor. "Developing countries that do not enjoy the advantages of developed countries with regard to cheap import in local currencies."

He pointed out the need for developing countries not to resort to debt markets only, but to attract foreign direct investment (FDI), pointing out in this regard that Egypt has important and promising investment opportunities in the electricity sectors and vital utilities for private investment, through participation or carrying out projects independently, and to increase the competitiveness. "Egypt has pumped huge investments during the past period in road infrastructure projects and conventional or renewable energy projects; to achieve a qualitative leap in these sectors."

He pointed out that in Egypt needs all public and private investments in all projects and fields. "Public investments are required to open the way for private investments, which paves the way for increased productivity."

The model closest to this is the "decent life" initiative, which requires huge investments amounting to EGP 800 billion annually, exceeding 4% of the national income annually and therefore requires the participation of private investments in projects aimed at developing infrastructure and providing health care.

"We need to raise efficiency and productivity to get a decent job for our children in the Egyptian countryside, which is one of the most important areas and opportunities, and the establishment of industrial and commercial centers and the development of agricultural activity."