Egypt’s new beginning, according to Renaissance Capital’s Mert Yildiz
Egypt is looking forward to a new future after its part in the Arab Spring. It all starts with elections this month, which need to be backed by sound economic policies.
We believe post-revolution Indonesia offers a clear example of what Egypt could achieve if it is set on the right economic path.
In the medium term, with its young population (more than half of which are under 25) and dynamic economy, Egypt could sustain growth rates in the high single digits throughout the rest of the decade.
Egypt offers a well-diversified economy (see chart one), with low overall inflation (see chart two)
… and low levels of private, domestic government and total external debt (see chart three).
But there are challenges ahead, notably falling levels of foreign direct investment (see chart four) and a stalled privatisation programme, as well as declining levels of foreign reserves.
A new government should seek a standby deal with the IMF, and get a grip on a creeping budget deficit.
But there is much to be optimistic about. If Egypt were to unleash its full potential, we believe it could be the success story of the decade.
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