Egypt to avoid recession unlike MENA region: Fitch Solutions

During the outbreak of COVID-19, Egypt was equipped with high growth buffers. In addition, the gradual lifting of the partial lockdown helped in speeding the recovery process.

Skjelland elaborated that the two loans from the International Monetary Fund (IMF), under the rapid finance instrument and the stand-by agreement, contributed to the positive forecast, during a July 6^th webinar by Fitch Solutions on the regional impact of coronavirus and the prospects for economic recovery.

The IMF emergency assistance boosted Egypt’s foreign reserves, which increased by 6% in June when compared to May.

Fitch Solutions’ official expected economic growth in the country to remain positive at 2.6% this year.

The Purchasing Managers’ Index of Egypt increased to 44.6 last month, despite the deterioration in business conditions due to the outbreak of COVID-19.

Skjelland added that the North African state is exposed to a decline in external demand, as tourism, remittances, Suez Canal receipts, and non-oil goods exports play a big role in propping up the local economy.

She added, “Optimism surrounding the business outlook for the next 12 months has improved markedly in the UAE and Egypt, while in Saudi Arabia and Lebanon, sentiment is still subdued.”

In April, Fitch Solutions and the World Bank expected Egypt to top the list of high economic growth rates in the region, despite the outbreak of the virus.

In 2019, Fitch Ratings affirmed the long-term foreign currency issuer default rating at 'B+' with a ‘Stable’ Outlook.