(MENAFN- Gulf Times) Egypt's economic growth is set to accelerate in the next two years, reaching 5.5% in fiscal 2016-17, a Reuters poll forecast yesterday.
After struggling to restore growth during more than four years of political upheaval, the Egyptian economy is showing signs of a revival.
The poll showed economists had lifted their growth forecasts for the current fiscal year ending in June to 4.2% - in line with the government's target and up from 3.5% in a similar poll in January - after the economy grew by more than 5% in the first half.
The outlook should continue to improve although not by as much as the government hopes, at least in the near term. President Abdel Fattah al-Sisi told an INVESTMENT summit in March that Egypt is targeting economic growth of 6% over the next five years.
The poll forecasts growth of 4.5% in fiscal 2015-16 and 5.5% in 2016-17.
"We expect the economy to grow at about 4.5%-5% over the next three years, which is just enough to keep the unemployment rate steady but not enough to make a big dent in it," said Jason Tuvey at Capital Economics in London.
Before the 2011 uprising, the economy grew at about 7% annually for several years. But even that pace was barely enough to produce work for the large number of Egyptian youths entering the job market. The uprising, which toppled Hosni Mubarak, hit the economy hard, discouraging INVESTORS and tourists and slashing growth to below 2% in 2010-11 from 5.1% the previous year. Unemployment has risen to about 13%.
However, billions of DOLLARS in aid from Gulf states have kept the economy afloat in the past two years as the government seeks to balance restoring growth, controlling inflation and curbing a swelling budget deficit. Egypt's economy grew 2.2% in fiscal 2013-14.
Analysts polled also raised their inflation forecasts for this financial year to 10.8% from 10.4% in the previous poll. It is then expected to slow to 10.0% in 2015-16.
Price pressures eased in November but have crept back up since, in part due to a weaker Egyptian pound.
Urban consumer inflation rose to 11.5% in March and core inflation ticked up to 7.21%.
Inflation rose after the government slashed energy subsidies in July to help reduce its fiscal deficit. The central bank subsequently raised its benchmark rates by 100 basis points but then unexpectedly cut them by 50 basis points in January.
"Headline inflation should come in below 10% in the second half of the (calendar) year when the effect of last year's subsidy cuts falls off the price comparison," Tuvey said. "That should give the central bank the space it needs to cut interest rates," he said.
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