Barclays Capital projected Egypt's real GDP growth at 3.7% in fiscal year 2014/15 that ends in June 2015 compared to a growth rate of 2.2% in FY2013/14, supported by the government's investment recovery program. It said that authorities launched several initiatives that include the $4bn Suez Canal Corridor Development Project that aims to increase the Canal's annual revenue from $5.1bn currently to $13.5bn.
It pointed out that other national investment projects are underway, including the Golden Triangle development project in Upper Egypt and the North West Coast Development plan, which aim to exploit the country's natural resources and mineral wealth. It added that the government would launch a public-private partnership program to address the country's infrastructure needs, with expectations to tender one project per month over the remainder of 2014 and about six to seven projects in 2015.
It anticipated that these investments would accelerate the annual real GDP growth to about 4% to 5% over the next three years. Further, it projected the fiscal deficit to narrow from 11.7% of GDP in FY2013/14 to 11% of GDP in FY2014/15, reflecting the implementation of fiscal reforms in July 2014. It noted that the Central Bank of Egypt could increase policy rates in the fourth quarter of 2014 following the unexpected 100 basis points rise in June 2014.
In parallel, Barclays indicated that Egypt's external and fiscal positions remain fragile, and anticipated that they will both remain reliant on funding from Gulf countries in the short-tern. It forecast the current account deficit at 1.7% of GDP in FY2014/15 compared to a deficit of 0.8% of GDP a year earlier. It added that GCC aid would help maintain the country's foreign currency reserves at almost their current levels and would further reduce the stock of short-term external debt by the end of 2014. It noted that authorities estimated the country's external financing needs at about $12bn in 2015.