2016 and 2017 will see moderate growth in the Egyptian economy, following five years of stagnation and volatility.
The fiscal and net export position will improve significantly on the back of fuel subsidy reform. Subsidy cuts will likely be watered down if public unrest occurs on a significant scale, however, the bulk of reform will remain in place.
Hikes to domestic energy prices will push consumer price inflation back into the double digits by the end of the year.
Egypt's geopolitical importance will ensure that even if an IMF agreement is delayed for longer than expected, further foreign aid commitments will materialise around the turn of the year. Western powers such as the US and EU have an interest in ensuring the North African country does not experience a more pronounced economic and political crisis. However, it will be donations from the GCC which keeps Egypt afloat this year.
We are below consensus on Egyptian growth for FY2017 (2.6% to 3.6%)
A failure to secure external financing (whether through the IMF or bilateral aid) raises the risks of a disorderly devaluation of the Egyptian pound.
Terror attacks, or disturbances caused by the Muslim Brotherhood could have a significant impact on investment and tourism figures.
|Nominal GDP, USDbn||230.7||259.5||255.0||296.7||315.5||317.0||345.9||374.1||411.5||458.3|
|Real GDP growth, % y-o-y||1.4||1.3||2.2||2.2||2.6||2.6||3.2||3.3||3.3||3.3|
|GDP per capita, USD||2,954||3,268||3,159||3,616||4,102||4,024||4,106||4,292||4,521||4,813|
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