Egypt balances between economic recovery and sociopolitical and security challenges

On the positive side:

  • The economy is slowly recovering. The IMF is expecting 3.8% GDP growth by June in the fiscal year 2014-2015.
  • A bold and broad government reform agenda will tackle macroeconomic imbalances.
  • Investor and business confidence has improved with large infrastructure projects.
  • This month’s big development conference should boost new investments.

On the downside:

  • Sociopolitical instability and security risk remain an issue. Legislative elections – first scheduled in March – have been delayed to an undetermined date, while there is a rising risk for Islamist attacks.
  • Egypt’s fragile external liquidity remains reliant on Gulf money, while the price of oil is at a low. So foreign exchange reserves need to be built up further.

Credimundi’s short-term political risk rating: after heavy fluctuations between 2011 and 2014 a more steady course is expected.

Commercial risk remains high
This is due to a difficult business environment, a weak credit supply, poor infrastructure, a depreciating currency and double-digit inflation.

Click here for more information and charts on Egypt.