BMI View: Ongoing improvement in Egypt's political situation - with the election of President el- Sisi having brought in a level o f stability not experienced since 2011 - will see the Egyptian freight transport sector enjoy continued expansion in 2015. While this will not be spectacular, we expect positive growth in volumes across all freight modes, supported by an improving consumer outlook, a recovery in the tourism sector, and increased construction. Crucially, the outlook is not only brighter for the near term, with significant investment into transport infrastructure ensuring continued growth over future years. Air freight will be the growth outperformer, boosted by a recovery in tourist numbers.
Following several quarters of anaemic growth, we see scope for a rapid acceleration in economic activity, giving the country the most positive growth outlook since the onset of the Arab Spring in January 2011. This is reflected in our outlook for economic growth and trade, and also, as a result, the freight transport sector. We retain our expectation for real GDP growth of 3.0% in FY2015 (fiscal year running from July 2014 - June 2015) and 3.8% in FY2016 from an estimated 2.25% in FY2014. Our forecasts are a notable uptick compared with previous years. Trade also is looking up, with a forecast expansion of 3.2% this year, accelerating to 4.7% next year, following FY2014's estimated 2.4%.
Road freight transport is overwhelmingly the most important freight mode in the country. We forecast growth of 2.3% on the 59.92mn tonnes we estimate were transported on the road network in 2014, which would mark the second consecutive year of positive growth following a four-year run of declines from 2010 to 2013, averaging 2.1% annually. This will be aided by an uptick in private consumption levels. Although this will be constrained by fuel subsidy cuts, there will nevertheless be an expansion, supported by the fall in global oil prices. The fuel subsidy cuts will have limited direct effect on road haulage volumes.
We forecast growth of 2.0% in rail freight volumes in 2015, which would take the year-end handling figure to 6.18mn tonnes. Over the medium term we expect growth to pick up moderately, averaging 2.5% annually over the period and accelerating to 2.8% in 2019. However, in the near term we believe that ongoing investment concerns over political stability in the country - following the ouster of long-serving President Hosni Mubarak in 2011 and the subsequent years of economic turmoil - will keep growth in volumes relatively sedate. Agribusiness will support growth in the near term, while mining - while challenged at present by lower commodity prices - will support more long-term growth.
The Egyptian air freight sector will be the outperformer in terms of growth in volumes transported when compared to road and rail freight, both in the near and medium term. We forecast an expansion of 3.0% in gross tonnage handling at Cairo International Airport in 2015, followed by 4.2% in 2016, and project that growth will average 4.2% annually over the course of our medium-term forecast period to 2019. This is greater than the average we forecast for road and rail freight over the same period. This is due largely to the expected recovery in the tourism sector.
Key BMI Forecasts
We forecast total road freight volumes will rise by 2.3% year on year over 2015 to reach 61.29mn tonnes.
We forecast total rail freight volumes will rise by 2.0% year on year over 2015 to reach 6.18mn tonnes.
We forecast total air freight volumes will rise by 3.0% year on year over 2015 to reach 399,780 tonnes.
We forecast total trade value to rise by 6.8% to reach USD118.23bn in 2015.
The top trade partners will be China, the US and Italy.