The World Bank has lowered Egypt’s 2024 Gross Domestic Product (GDP) growth forecast to 3.3% from the anticipated 3.7% in October, citing geopolitical tensions in the Middle East in the Global Economic Prospects report.
Egypt GDP growth
The report suggests these tensions could contribute to inflation, restrict private sector activity, and increase pressure on external accounts due to expected reductions in tourism and remittance revenues.
Since October, Egypt has seen a decline in both headline and core inflation rates, as reported by the Central Agency for Public Mobilization and Statistics (CAPMAS) and the Central Bank of Egypt (CBE). The annual urban consumer price inflation rate dropped to 33.7% in December from November’s 34.6%, while the monthly inflation slightly increased to 1.4% in December from 1.3% in November, according to CAPMAS figures released on Wednesday.
Egypt targets to bring down the inflation to the single-digit zone in 2025, and to reach 7% in 2026.
On the regional front, the report said that the conflict has heightened uncertainty around growth forecasts in the Middle East region, expecting the region’s growth to rebound to 3.5% in 2024 and 2024 with the assumption that the conflict does not escalate.
Forecasts, revised upward from June expectations, highlight stronger-than-expected growth among oil exporters, driven by a rebound in oil activity. The report anticipates growth in GCC countries to reach 3.6% in 2024 and 3.8% in 2025. Additionally, the report projects real GDP growth in the region’s oil-importing countries to recover to 3.2% in 2024 and 3.7% in 2025, excluding Egypt.
The report anticipates a severe downside risk for the region in the event of the conflict intensifying, leading to spillovers into neighboring economies and a surge in refugees. It emphasizes the vulnerability of Middle East and North African countries to natural disasters and climate change, with increasing frequency and severity of adverse weather events.
Concerning oil exporters, the report notes that a fall in oil prices or weaker demand may limit oil production, potentially leading to prolonged cuts.
In oil-importing countries, tighter global financial conditions are expected to weaken growth prospects due to substantial external financing needs.
For Gaza, amid escalating conflicts, the economic outlook for the West Bank and Gaza remains highly uncertain. The report projects a 6% contraction in growth for 2024, following a 3.7% contraction in 2023. The massive destruction of fixed assets in Gaza is anticipated to cause a significant economic downturn. If the conflict de-escalates, reconstruction efforts are expected to contribute to a rebound, with growth reaching 5.4% in 2025.
On a global scale, the report predicts a third consecutive year of slowing growth, dropping from 2.6% in 2023 to 2.4% in 2024—nearly three-quarters of a percentage point below the 2010s average. Developing economies are projected to grow at 3.9%, over 1% below the average of the previous decade.
The Chief Economist and Senior Vice President of the World Bank Group, Indermit Gill, cautioned that without a significant course correction, the 2020s could be deemed a decade of missed opportunities. He emphasized that near-term growth will remain weak, leaving many developing countries, especially the poorest, burdened by paralyzing levels of debt and precarious access to food, hindering progress on various global priorities.