Egypt’s economy has grown at a robust pace over the past couple of years, as demand strengthens, the economy should be able to record fast growth over the next couple of years without stoking inflation pressures, according to Capital Economics (CE).
CE expects the gross domestic product (GDP) growth to strengthen from 5.5% this year to between 5.8 and 6% in fiscal year 2019/2020 as demand is supported by slowing austerity and a strengthening labour market.
Capital Economics estimates that there is still an output gap equal to 2% to 2.5% of potential GDP.
“Egypt can probably record another few years of above-potential GDP growth before capacity constraints begin to bite in FY2021/2022,” the report indicated.
Egypt has recorded growth rates over 5% since the start of 2017, exceeding the level between 2011 and 2016.
A key reason why the economy has been able to record above-potential growth is that it has called upon under-utilised resources.