Egypt’s Economic Outlook – Dcode EFC

Published: June 2018

25 Pages

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Summary

In the past eighteen months and within the context of the IMF agreement, the Egyptian economy has seen an intensive and largely unprecedented wave of reform aiming at correcting major macroeconomic imbalances. In spite of socially painful aftermath, macroeconomic indicators are progressively improving. Growth, current account and fiscal indicators are all responding positively to reform, signaling gradual rebalancing of the economy.

In our view, the most eminent upshot of recent macroeconomic measures is the rebalance in growth. After being largely driven by consumption, GDP growth has lately seen other drivers picking up to significantly contribute to its momentum. Exports in particular have benefited from a more competitive currency. On the downside, investment remains predominantly public and FDI has contracted on annual basis during H1 2017/18. Moreover, Egypt’s external debt, previously one of its highest strengths, is rapidly mounting.

Going forward, the current “macroeconomic” reform drive is expected to continue especially if the Egyptian government opts to successfully conclude its commitment with IMF. However, decoupling macroeconomic reforms from deeper structural and social ones would impede, or even jeopardize, the former.

In this report, we analyze recent economic developments following the re-launch of the economic reform program, highlighting key strengths, weaknesses and outlook risks in each macroeconomic sector.


Table of Contents

I. Global Economic Outlook 

II. Egypt’s Political and Economic Landscape 

  1. Political and Security Developments
  2. Economic Setup

III. Egypt’s Economic Outlook 

  1. Key Assumptions
  2. Economic Growth and Unemployment
  3. Fiscal Outlook
  4. Prices, Interest Rates & Banking Intermediation
  5. Monetary Policy and Exchange Rate
  6. External Accounts

Annex: Summary of Key Macroeconomic Projections


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