Owing to ongoing economic instability in the form of high inflation and currency depreciation, and rising prices for energy and construction materials, Egypt's construction industry growth is expected to stand at 9.7% in real terms in 2022, following an 8.5% growth in 2021, found GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘ Egypt Construction Market Size, Trends and Forecasts by Sector – Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis, 2022-2026‘ reveals that following a drop in industrial outputs and new orders in the first quarter of 2022, the sector’s growth this year will largely be driven by the government’s focus on promoting and investing in domestic manufacturing and export industries.
The Egyptian government announced plans to implement 45 major national and strategic infrastructure projects in the coming financial year, including the construction of 10 transverse axes on the Nile, the establishment of 18 overpasses, the completion of 1,000km of electrification of railway signals, the expansion of a metro network and the completion of 47 express train stations.
Dhananjay Sharma, practice head at GlobalData, comments: “Currently, Egypt is suffering severe economic challenges, and in late March 2022, the monetary authorities devalued the Egyptian pound by around 14%, following a period of intense pressure on the currency that stemmed from a withdrawal of foreign capital. Egypt’s central bank also increased interest rates amid rising inflationary pressures, with the country facing soaring food prices given its heavy reliance of wheat imports from Russia and Ukraine. Notwithstanding the worsening economic environment and upward pressure on energy and materials prices, the construction industry is poised for relatively strong growth, supported by large infrastructure projects, such as the New Administrative Capital (NAC), New Alamein and New Galala.”
In 2021, Egypt’s construction market was valued at US$64.5 billion and was projected to grow at an AAGR of more than 10% by 2026. The industry’s growth over the forecast period will be supported by investments in the development of smart cities. In November 2020, the government allocated EGP90 billion ($5.3 billion) to develop infrastructure for these cities. The government also plans to invest EGP512 billion ($30.2 billion) in the Cairo metro expansion over the next four years and EGP325.5 billion ($19.2 billion) to implement 11 new petrochemical projects until 2035.
Sharma concludes: “Despite the economic instability in the short term, the construction industry is expected to be one of the major pillars driving economic growth as work continues on the planned major projects.”
