The coronavirus crisis could potentially impact the Egyptian Economy through the following channels:
Impact on the monetary economy
- Plunge in oil prices to reduce Suez Canal revenues; narrow oil-trade deficit; alleviate fiscal deficit pressure; and weaken remittances.
- GCC economic slowdown to reduce tourism, FDI share and retract FPIs, but narrow the trade deficit.
- Weakening global economies to lower trade volumes but narrow trade deficit; reduce Suez Canal and tourism revenues; retract funds from FPIs and FDIs.
- BOP net impact: lower tourism, remittances and Suez Canal revenues, with narrower trade deficit; to cause exchange rate depreciation, higher inflation, and monetary policy responses.
Impact on the real economy
- Fiscal Sector – Expenses to fall, revenues to fall, treasury yields to rise; and debt service to fall.
- Real Sector – Weaker GDP performance, lower PMI and employment.
Download the full report for our in-depth analysis of the impact of coronavirus on the overall economy.