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.
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