Al-Mashat: Economic growth in Egypt to see boost in Q2, supported by industry

Egypt's Minister of Planning and Economic Development and International Cooperation, Rania Al-Mashat, stated that preliminary indicators suggest Egypt's economic growth is projected to maintain its upward trajectory in the second quarter of the current fiscal year. This positive outlook instills confidence in Egypt's economic development and sets a promising tone for future performance.

Al-Mashat made her remarks during the annual Iftar dinner of the American Chamber of Commerce in Cairo, where she discussed the progress of the Egyptian economy and its future potential. She emphasized that enhancing Egypt's economic prospects requires the combined efforts of the government, the private sector, civil society, and chambers of commerce. This collaborative spirit is crucial for driving sustained economic advancement in Egypt and fostering a supportive ecosystem for businesses.

Al-Mashat highlighted that planning and international cooperation involve two primary sources of funding: public budget financing and international partnerships. Both play a vital role in promoting economic development and are underpinned by macroeconomic stability and ongoing structural reforms. She noted that funding is no longer limited to fiscal allocations for projects but also includes public policies, inter-institutional coordination, and resource mobilization. Economic development encompasses various aspects, including human development, industrial progress, job creation, SME growth, and private investment, all contributing to a holistic approach.

Al-Mashat also emphasized that Egypt is striving to achieve high-quality growth, which entails sustainable growth based on long-term investments, a green economy, entrepreneurship, technology, and digital transformation. She pointed out that Egypt possesses competitive advantages such as a diversified economy, a strong industrial base, and a skilled workforce. Furthermore, entrepreneurial activity, particularly in the digital economy, fintech, e-commerce, and digital services, is on the rise, showcasing a vibrant and innovative landscape.

Al-Mashat described that Egypt's economic model is shifting from a non-trade economy to one centered on trade and exports, emphasizing industrial production oriented towards foreign markets. She stated that this shift will increase added value, enhance production efficiency, and create technology-based jobs, thereby boosting overall productivity. Moreover, Egypt aspires to solidify its position as a regional green energy hub and leverage its ports and strategic location to strengthen its role in agriculture and trade, becoming a regional trade hub, facilitating seamless commerce.

Al-Mashat also mentioned that the average growth rate for 2023-2024 is projected at 2.4%, with a rise to 3.5% in the first quarter, and further improvement is expected in the future. She also observed that the Purchasing Managers' Index (PMI) has exceeded 50 points, indicating an increase in output. She highlighted that non-oil manufacturing is playing a significant role in the growth, with strong performance for two consecutive quarters suggesting increased added value, higher exports, and a more resilient industrial base. The information and communications technology sector is also experiencing significant growth, particularly in outsourcing services, with Egypt ranking third in the Global Services Location Index.

Al-Mashat noted that the ministry is implementing a ceiling on public investments to regulate spending and allocate resources to priority sectors. This has led to a significant shift in the share of private investment in GDP, with private investment accounting for 63% of total investment in the first quarter. She added that the reduction in public spending creates opportunities for the private sector to take a leading role in development efforts, and the increase in bank domestic credit to the private sector indicates growing confidence, encouraging further participation.

The minister also acknowledged the improvement in Egypt's external economic conditions, with an increase in foreign direct investment in both the oil and non-oil sectors, which has boosted foreign exchange reserves and stabilized the exchange rate. She attributed this to the monetary and fiscal reforms implemented in March of last year, which restored confidence and facilitated access to foreign currency for businesses to acquire production inputs. Tourism revenues are also showing a positive trend, although Suez Canal revenues have been significantly impacted by global developments, requiring adaptive strategies.

Regarding financial indicators, Al-Mashat stated that the budget shows a primary surplus and a reduction in the overall deficit. Inflation has begun to decline, reaching 12.8%, with core inflation at 10%, reflecting a stabilization of prices, which is an important factor in attracting investment and achieving sustainable growth. She concluded that structural reforms, including promoting financial stability, enhancing economic competitiveness, and supporting economic diversification and the green economy, are essential for long-term sustainable economic transformation, ensuring resilience.