Outlook coverEgypt’s Economic Outlook – Dcode EFC

Economic Outlook

Published: July 2015

32 Pages

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Summary

Despite the projected improvement in most macroeconomic indicators, the sustainability of the current economic reform agenda remains subject to key risks. A prolonged delay in parliament formation would slow down the reform program by slackening the ratification of many pending laws and pushing ahead with much needed legislative reforms. The government’s uncoordinated policies might affect reform if it failed to quickly remobilize public support for clearly defined set of measures. While oil price declines gave Egypt the fiscal space to initially abide by its subsidy reform plan, the persistence of subdued international oil prices for a prolonged period of time would have adverse implications on the economies of the Arab Gulf States, and would possibly jeopardize their current economic support to Egypt. This will deprive the Egyptian economy of a key liquidity channel that kept the economy partially cruising and resilient in the face of several shocks. Moreover, any unexpected and uncontrolled hike in inflation would delay the efforts to reform the current inefficient subsidy system and would lead to social discontent and unrest. Lastly, if the restrictions on foreign exchange rates were maintained in place beyond the current fiscal year, 2015/16, Egypt’s external position will be severely damaged and economic activity will be significantly undermined.

 


Table of Contents

I. Executive Summary

II. Political and Economic Landscape

  1. Egypt’s Political Setting
  2. Egypt’s Security Situation

III. Egypt’s Economic Setting

Global Economic Outlook

Egypt’s Economic Outlook

Key Outlook Assumptions:

  1. Growth and Unemployment

Private consumption

Public Consumption

Investment

Exports

Imports

Unemployment

2. Fiscal Outlook

Budget Revenues

Budget Expenditures

Government Debt

3. Prices and Interest Rates

Consumer Prices

Interest Rates

4. Banking Indicators & Exchange Rates

Banking Intermediation

Foreign Exchange Market

5. External Sector

Arab Gulf Support

Non-Oil Trade

Oil-Trade

Tourism Receipts

Private Remittances

Foreign Direct Investments

Foreign Portfolio Investments

Key Risks

Worsening security situation

Postponement of Parliamentary elections

Uncoordinated economic policies and slippage in reforms

Prolonged foreign exchange market failure

Uncontrolled inflation hikes

Decline in Gulf financial support

Summary Table: Performance of Egypt’s Main Economic Indicators

Annex A: Outcomes of the Egypt Economic Development Conference (EEDC)

Annex B: The Development of Egypt’s Credit Ratings

Annex C: Reforms/Measures taken by the Ministry of Petroleum to improve availability of fuel products

Annex D: Measures taken by the Ministry of Electricity to bridge the power gap

Annex E: Key legislations ratified since June 2014

 


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