Egypt’s Government Pledges $6.4 Billion to Protect Economy from COVID-19 Driven Downturn
LONDON, UNITED KINGDOM -- Egypt’s construction industry has been among the fastest growing in the world, expanding by an average of over 9% in the past few years, and another year of rapid growth was expected in 2020, says data and analytics company, GlobalData.
“As the authorities announce strict measures to contain the spread of the Coronavirus (COVID-19), there are now major risks facing the industry,” said Yasmine Ghozzi, economist at GlobalData.
Egypt’s Prime Minister, Mostafa Madbouly, announced that the country will suspend aviation movement at all airports from March 19 to 31. All hotels in Egypt will launch a wide sterilization campaign during the suspension period, which may cost Egypt up to EGP2.25 billion ($142.8 million USD) in losses in the tourism and aviation sectors.
Meanwhile, the Governor of the Red Sea issued a decree to halt domestic tourism for 14 days starting from the departure date of the last foreign tourist. The decree also includes quarantining workers in the tourism industry for 14 days. These measures are likely to have a severe impact on the construction industry, particularly in commercial buildings, as investment plans are expected to be halted, if not cancelled outright.
“The Sisi administration is preparing a new stimulus package to help the economy,” Ghozzi said. “It has pledged to allocate EGP100 billion ($6.4 billion USD), including EGP1 billion ($63.5 million USD) aimed at supporting the industrial sector in the wake of the coronavirus outbreak. The Central Bank of Egypt slashed interest rates by 300 basis points (bps) in a surprise move on March 16. A rate cut of this magnitude will give room to policymakers to deal with a potentially widespread coronavirus outbreak, support the economy, and bail out EgyptAir, the national airline carrier. Assuming these measures are successful, it could help to prevent a slowdown in the overall economy, which will help to maintain investor confidence and allow for further expansion in construction output.”