Boston, MA -- (SBWIRE) -- 04/11/2014 -- We still think there is reason to believe the situation will improve for carmakers based in Egypt in 2014, as the country's PMI reading for December 2013 of 52.0 was its joint second-highest in the 32 months of the survey's existence, following the record 52.5 in November, and only the eighth time it has exceeded 50. Coupled with Toyota Motor's assurance in late 2013 that it intends to commit to manufacturing in the country, this suggests a slightly more optimistic outlook going forward. While not giving more details or a timeframe, Toyota said in a statement to World Bulletin that it intends to expand globally including Egypt, 'with the expectation that Toyota will invest more in Egypt over the coming period'.

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However, risks to the business environment stem from the increasingly complicated political situation, which has taken a new turn with the resignation of the whole cabinet in February 2014. As government policy plays a crucial role in the development of the manufacturing sector, the outcome of this political twist will be a key factor in our forecasts going forward. Under the constitution, elections need to be held by mid-April.

Government policy already looks set to make its mark on the sales side of the sector. In mid-February, the interim government gave the minister of finance the go-ahead to ban imports of motorcycles, three-wheeled taxis (tuk-tuks), which are largely unlicensed, and the parts to assemble them locally. The ban has not yet been implemented and BMI believes there are a number of reasons why it could do more damage than it achieves and may yet be shelved. Indeed, the resignation of the cabinet throws the law into even more uncertainty.

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