Sunday 31 May 2020

Egypt’s strong economic fundamentals 'to help speedy Covid-19 recovery'

ABU DHABI, March 30, 2020

In response to the spread of Covid-19, many governments in the Middle East and around the world have announced support packages to limit the economic impact of the virus, said Savills, the leading global real estate consultancy, which has been analysing key markets in the Middle East to provide preliminary economic outlooks.

In its latest report, Savills looked at Egypt, where the government has made key announcements over the past few days to also mitigate an economic slowdown.
Catesby Langer-Paget, Head of Savills Egypt, said: “As the pandemic unfolds across the globe, the world GDP growth is now expected to decline to less than 1 per cent from 2.9 per cent in 2019. A slowdown in global growth and credit crunch across advanced economies is likely to have a ripple effect across emerging economies such as Egypt."
"However, the fundamentals of the local economy remain strong," he stated.

Langer-Paget pointed out that Egypt was one of the fastest growing economies in the region with a GDP growth of 5.6 per cent in 2019.

"The country also managed to reduce its domestic debt to 66.7 per cent from 2019 to Q1 2020 - its lowest rate in 10 years - due to the various economic reforms carried out by the Government. A young and educated population and rising household income should bode well for the economy in the long run,” he added.
Savills cautioned that the short- to medium-term impact on economic growth of Covid-19, however cannot be overlooked.

The government has already suspended all international flights till April 14 across all airports. It has also reduced the presence of public sector employees across government offices to stem the spread of virus. In addition, the Sisi government has announced the implementation of a curfew which is in place for two weeks from March 25 between the hours of 7 pm and 6 am, it added.

In bid to curb the negative impacts of Covid-19 on Egypt’s economy, the government has taken some precautionary and pre-emptive actions. These include allocation of an economic package worth E£100 billion ($6.34 billion); the Central Bank of Egypt's decision to cut key interest rates by 3 per cent; postponement of credit dues for business and personal debt (including real estate loans) by six months and raising daily transaction limits on credit cards as well as cancelling fees and commissions applied at POS and on withdrawals from ATMs for six months.

Catesby said: "Like other regional markets, it’s still too soon to tell the exact impact Covid-19 will have on Egyptian real estate sector. However, we know that few areas of the sector may be impacted more than the others."
"Any disruption to the real estate market is likely to be a near term delay or a knee-jerk reaction rather than a fundamental downturn over the long term," he added.

Catesby pointed out that the direct impact of Covid-19 on the real estate market was likely to be short term, given all the precautionary measures and the structural approach the Egyptian government is taking in facing the current international problem.

"Needless to point out that there will be inevitable impacts on economic growth, tourism, high-street retail spends, and so forth but there are longer-term outtakes such as accelerating trends within flexible working, online retail and improving supply chain," he added.-TradeArabia News Service


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