x Abu Dhabi, UAE Friday 21 July 2017

Egypt's economy rallies at the close but can't avoid contraction

Egypt's economy rebounded slightly in the final quarter of last year but still likely ended the calendar year in negative territory.

Egypt's growth expanded slightly in the fourth quarter but the rebound is unlikely to have stopped a full-year economic slide, the country's first since the 1960s.

GDP expanded 0.4 per cent in the three months that ended on December 31 compared with growth of 0.2 per cent in the previous quarter, according to a Ministry of Planning and International Cooperation report, cited by Bloomberg News.

The report confirmed "fears that the economy contracted last year for the first time since at least the 1960s," wrote Said Hirsh, Middle East economist at Capital Economics, in a research note.

It meant Egypt's GDP contracted by 0.8 per cent across the full year, he wrote.

A recovery in the construction and tourism sectors helped to arrest the slide in the fourth quarter. Construction dipped by 0.6 per cent, a smaller contraction than the 2.8 per cent fall in the previous three months, Bloomberg reported, citing the report. Tourism fell 6.5 per cent in the fourth quarter after slipping 10.4 per cent in the earlier period.

"Looking forward, we are still concerned about increasing strain's on Egypt's balance of payments and mounting pressures on the pound," Mr Hirsh wrote.