Boston, MA -- (ReleaseWire) -- 06/13/2014 -- Core Views:
- One the whole, 2014 will be a relatively positive year for the Egyptian economy, as the currency stabilises and investment returns to the county. Sporadic outbursts in public unrest and ongoing 'policy drift' will undermine a more pronounced economic recovery.
- Egypt will have little choice but to make more pronounced reforms to its domestic energy subsidy system. That said, we do not expect any major reforms ahead of parliamentary elections, which we expect to take place in June 2014.
- Hikes to domestic energy prices will push consumer price inflation back into the double digits by the end of the year.
- Egypt's geopolitical importance will ensure that even if an IMF agreement is delayed for longer than expected, further foreign aid commitments will materialise over early 2014. Western powers such as the US and EU have an interest in ensuring the North African country does not experience a more pronounced economic and political crisis. However, it will be donations from the GCC which keeps Egypt afloat this year.
- We do not expect an IMF deal in 2014, as the economic rationale has waned somewhat since the influx of foreign aid and it is politically unpalatable at present.
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Major Forecast Changes
- Following an influx in foreign aid in 2013, it appears as though Egypt will be spared a more pronounced balance of payments crisis until mid-2014. That said, as the aid inflows are likely to weaken the government's resolve to push ahead with necessary subsidy and tax reforms, we do not expect an IMF agreement to be signed in the near term. We are forecasting real GDP growth of 2.3% and 3.1% in FY2013/14 and FY2014/15 respectively.
Key Risks To Outlook
- A failure to secure external financing (whether through the IMF or bilateral aid) raises the risks of a disorderly devaluation of the Egyptian pound.
- Egypt may become stuck in a protracted democratic transition, in which case long-term growth would fall well below potential.
The Egypt Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Egypt and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..
An influential new analysis of Egypt's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).
- Forecast the pace and stability of Egypt's economic and industry growth through end-2017.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
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