Things are starting to look up for the Egyptian economy. Late last week Minister of Planning Hala Al-Said told the cabinet that initial data on the first quarter of fiscal year 2021-22 (July-September), showed that GDP had grown by 9.8 per cent compared to the same period the year before. The minister said she expected the overall GDP growth to range from 5.5 per cent to 5.7 per cent by the end of the current fiscal year in June 2022, which would be a huge improvement on the 3.6 per cent achieved in the fiscal year 2019-2020.
Such high GDP in the first quarter hopefully reflects a trend; in the last three months, GDP had also done well, growing by 7.2 per cent annually. While such exceptional performance is attributed to a strong base effect, the economy grew at a mere 0.7 per cent in the first quarter of the last fiscal year due to the slump caused by Covid-19 disruptions, and yet the news figures suggest that the economy is on the rebound.
Leading the growth was the hospitality sector (hotels and restaurants) with a rate of 182 per cent, which reflects remarkable recovery after the repercussions of the pandemic, a cabinet statement about the meeting said.
The hospitality sector must have also been affected by the slump in tourism due to Covid-19. In June 2021 annual Economic Impact Report (EIR) of the World Travel & Tourism Council (WTTC) registered a dramatic collapse in Egypt’s travel and tourism sector in the wake of the pandemic. According to EIR, the sector’s contribution to GDP fell by 55 per cent from $32 billion (8.8 per cent in 2019) to $14.4 billion (3.8 per cent) just 12 months later. However, the picture could have been significantly worse, said the WTTC, had it not been for the government’s measures to keep the travel and tourism sector afloat.
What the government did to help that sector, not just in terms of supporting the workers, but also by implementing health and safety protocols, promotional campaigns and continued development of archaeological sites is bring back tourists with a bang. Last Thursday’s spectacular opening of Luxor’s Avenue of the Sphinxes was the cherry on the cake in that regard. In fact, during the event, the city of Luxor was fully booked for the first time in a decade.
Besides hospitality, the Suez Canal also achieved a growth rate of 20 per cent during the first quarter of the fiscal year 2021/2022, a significant recovery compared to the same quarter in the previous year due to the increase in the canal’s revenues, the number of ships and tonnage, a cabinet statement said.
The manufacturing sector also did well, achieving a growth rate of 15.2 per cent, the highest quarterly growth in two decades, after shrinking by 12.7 per cent during the same quarter in the previous year, as a result of improvements in the paper, pharmaceutical, beverage and clothing industries, the statement said
Meanwhile the construction sector saw a growth rate of 10.5 per cent compared to 2.6 per cent in the corresponding quarter of the fiscal year 2020/2021. This is due to the increase in the value of investments by the New Urban Communities Authority, the cabinet statement added.
To maintain the momentum and avoid any threats to economic recovery, the government is working hard to vaccinate citizens against the Covid-19, aiming to achieve a target of 40 per cent of the population by end of year. According to World Health Organisation data, around 24 million people have received at least one dose of a vaccine, while around 13 per cent of the population are fully vaccinated. This is an important factor in ensuring the health of the economy, especially with news of the new Omicron variant dampening hopes of recovery around the world.
*A version of this article appears in print in the 2 December, 2021 edition of Al-Ahram Weekly.