The Managing Director, of Southern and Eastern Mediterranean at the European Bank for Reconstruction and Development (EBRD), Heike Harmgart, stated that the pressure of global food prices has led to more diversification strategies. This came during a panel discussing the EBRD Regional Economic Prospects report; which the EBRD released during its annual meetings held in Uzbekistan.
“Deeply dependent countries like Egypt, with 80% of grain imports from Russia and Ukraine, and Tunisia have also started to increase local production and increased efficiency of local production and have started to diversify,” Harmgart, stated.
Yet, this is “giving hope that there is a sort of a moderation of global food prices passed through to these countries,” She added.
These statements came days after Egypt announced the start of the wheat harvest season along with several crops in the East Oweinat in the Western Desert.
East Oweinat project, located 500 km southwest of Lake Nasser, is Egypt’s second largest wheat production project. 146,000 feddans of wheat in East Oweinat has been cultivated with a harvest rate of 30,000 feddans, as well as other strategic crops this season, according to the Chairman of the National Company for Land Reclamation and Agriculture in East Oweinat, Tawfik Samy.
Reclaiming more than 186,000 feddans of desert land, it will produce an annual 3 million tons of various kinds of crops, including wheat.
Harmgart referred to the regional cooperation, saying that: ”For the first time also some of the Middle Eastern countries are speaking of joint storage opportunities and also better cooperation in crisis around food and grain in particular.”
However, Harmgart pointed out the drought problem in the region. She commented that this is another policy option that would potentially help to dampen some of these shocks and sort of these idiosyncratic weather shocks, and drought in Morocco.
As for a decent harvest, she said that maybe somewhere else in the Middle East to hopefully have a better joint solution to these problems, on the other hand, the same spikes aren’t seen due to the global effect, with a lot of local volatility around foods in these markets.
The report included the EBRD revision of its forecasts for Egypt’s growth rate during the current and coming FYs. As for the EBRD Regional Economic Prospects, it stated that growth in Egypt slowed to 4.2 % year on year in H1 of this FY, down from 9 percent in the same period the previous year.
The report attributed the slowdown to the deceleration in the manufacturing and construction sectors, which were affected by foreign currency shortages, as well as the impact of the war on Ukraine on the Suez Canal and tourism sector’s revenues.
It also added that the Egyptian pound lost more than 50 percent of its value against the US dollar between March 2022 and April 2023, amid heightened external vulnerabilities and the central bank’s decision to shift to a flexible exchange-rate regime.
“This depreciation, coupled with elevated international commodity prices – Egypt is a net importer of food and oil – pushed inflation close to 33%, despite cumulative policy rate hikes of 1,000 basis points over the previous year,” it added.
Accordingly, the EBRD has revised its forecast for Egypt’s real GDP growth for the current fiscal year to 4%, expecting it to rebound to 4.8% in FY 2023/2024.
