Egypt to surpass Russia, Japan as 7th largest economy by 2030

Egypt’s economy is slated to surpass Russia, Japan and Germany as the world’s seventh largest economy in 2030, according to a new long-term forecast released by Standard Chartered Plc.

Egypt’s gross domestic product (GDP) is expected to amount to some $8.2 trillion, followed by the Russian economy with $7.9 trillion, and Japan’s at $7.2 trillion.

“Our long-term growth forecasts are underpinned by one key principle: countries’ share of world GDP should eventually converge with their share of the world’s population, driven by the convergence of per-capita GDP between advanced and emerging economies,” Standard Chartered economists said of the findings.

Turkey ranked fifth on the list that was unsurprisingly topped by China, with an expected total income of $64.2 trillion, followed by India and the USA.

But the report also warned of potential pitfalls in emerging markets in Asia and the Middle East which could reduce productivity. The comments were echoed by the World Bank yesterday, as it announced that the global economic growth rate would decline to 2.9 per cent in 2019 as trade risks continue to grow.

READ: Egypt to ‘completely’ lift fuel subsidies in 2019

Although Egypt has a high 5.6 per cent growth rate predicted for 2019, it has struggled with reforms implemented as part of President Abdel Fattah Al-Sisi’s severe economic programme and conditional loan agreements with the International Monetary Fund (IMF) and World Bank.

Adjusted indices released this week found that unemployment rose modestly in December amid a series of job cuts. Growth in the non-oil economy subsequently contracted, with demand in the private sector, a key driver of incomes, also falling to a slower pace.

Whilst the IMF has praised the country’s progress, last year it emphasised that the government must deepen reforms and cut back state funding to achieve higher growth, despite the cost to the public.

In 2017, inflation in Egypt reached its highest level since 1986, at 33 per cent; the country had struggled with the devaluation of its currency to half its value for many months, after it was floated by the government in 2016. Finance authorities also introduced VAT for the first time, increasing the cost of countless goods; it simultaneously cut state subsidies on fuel, electricity and water.

The policies have added to the financial woes of many millions of Egyptians living below the poverty line, who have complained of being unable to afford basic necessities since the price jumps. Unemployment, a problem in most of the region, has also been largely unaddressed, with one in three young people still unable to find permanent work.

Last month the World Bank announced that the Middle East needed to create some 300 million jobs by 2050 in order to keep up with the demands of population growth.

READ: Egypt economic reform designed to satisfy IMF, international investors