March 26, 2020 / 4:30 PM / 12 days ago

UPDATE 1-Egypt reduces GDP growth target for FY 2019/20 to 5.1% - minister

(Adds more detail, background)

CAIRO, March 26 (Reuters) - Egypt’s GDP growth for the fiscal year that begins on July 1 could fall to 3.5% if the coronavirus crisis continues until December, Planning Minister Hala al-Saeed said on Thursday, down from previous estimates of around 6%.

Growth of gross domestic production (GDP) in the current fiscal year was likely to fall to 5.1% from 5.6% as the coronavirus crisis hits the global economy, she said, adding that growth was expected to slow to 5.2% in the January-March 2020 quarter and 4% in April-June.

If the coronavirus crisis ends by end-June, the North African country could grow in the coming fiscal year by a quicker 4.5%, Saeed said.

She said she expected an extended economic slowdown both in Egypt and internationally that would hurt the labour market.

“There are sectors that will be severely affected by the crisis such as tourism, restaurants and the entertainment industry,” Saeed said.

Egypt, with a rapidly growing population that just topped 100 million, had been counting on high growth to absorb hundreds of thousands of workers who enter the labour force each year.

Inflation is expected to rise to 9.8% if the crisis continues until December, as demand for medical supplies, cleansers and other products increases and as a lack of imported inputs hinders local production capacity, she said, speaking after a cabinet meeting held by video conference.

Finance Minister Mohamed Maait, also speaking after the meeting, said the cabinet had approved the draft law of the FY 2020-21 budget.

The 2020/21 budget aimed to reduce the total deficit to 6.3% of GDP and increase the primary budget surplus to 2%. This would result in a public debt of 82.7% of GDP as of end-June 2021, he said. (Reporting by Momen Saied Atallah, writing by Nadine Awadalla, Mahmoud Mourad and Patrick Werr; Editing by Toby Chopra and Alex Richardson)

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