Egypt Business Forecast Report Q4 2009

Publication Date	July 2009
Publisher	Business Monitor
Product Type	Report
Pages	58
ISBN Number	not applicable
Product Code	BMI04092

Buy this product or for assistance call +44 20 7060 7474

PDF £250.00$416 | €280

FAX Order above formats by FAX

Summary

The Succession And Stability Question Times remain hard as we head towards the end of the year. The economic slowdown is of particular concern given the unemployment rate and relatively tense domestic political situation. The global economic situation shows some signs of improvement - we have upgraded our forecast for US GDP growth in 2009, from -3.3% to -3.0% - with the recovery in financial markets now being mirrored by the economic data. With this being an externally driven slowdown for Egypt, this is good news. However, there are still some pretty gloomy figures coming out, and as elections get nearer - and unemployment rises - political stability will be threatened too.

On the political front, Egypt's internal stability remains somewhat precarious, and the unrest witnessed in Iran following the disputed presidential election in June will have made the government nervous. Although Egyptians have not managed to mobilise against the government, we believe that there is a lot of popular dissatisfaction with its perceived undemocratic approach and friendly relations with the US and Israel. One more election considered to be unfair could spark similar levels of protest (although the failed attempts of the Iranian opposition protestors will have disheartened sympathisers abroad). We expect the government to keep spending generously to counter the effects of rising unemployment and the economic slowdown, in order to ensure a smooth election process in 2012 (or sooner).

Economically, we are focusing on fiscal policy and investment climate this quarter, with our growth forecast for 2009 unchanged (at 3.7%) and that for 2010 up slightly at 2.5%. We see the government spending generously and borrowing domestically to finance this expansion in a time of lower employment and consumer confidence, and as such it will be some time before private-sector lending picks up again. Banks will continue to prefer safe-haven government debt (which, in any case, will be increasing in supply). In addition, we think the decline in inflation has been disappointing, and expect only limited downside in interest rates.

The business environment will continue to be affected by political and economic developments: the government does seem to remain broadly pro-investment and pro-reform for now, but it could crowd the private sector out over the coming years, as it issues larger volumes of low-risk debt and props up growth through infrastructure spending. In addition, privatisation appears to be well and truly on hold. However, there have been a number of positive developments lately: among other moves, the Egyptian Stock Exchange (EGX) will launch the Egyptian Investor Relations Society (EIRS) in July 2009 as a means of improving transparency and disclosure between companies and investors.

Content

Executive Summary
The Succession And Stability Question
Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Ratings
- Domestic Politics
- Looking To Tehran: Election Focus Growing
- Egypt's criticism of Iran's alleged oppression of protestors may come back to haunt it, with the 2010
- parliamentary and 2012 presidential polls set to be a genuine test of the NDP's control
- TABLE: POLITICAL OVERVIEW
Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Ratings
- Economic Activity
- Growth Still Holding Up Well
- The robust figures from Q1-Q3 of FY08/09 are encouraging, but we still see growth bottoming out next year
- TABLE: ECONOMIC ACTIVITY
- Fiscal Policy
- Spend, Spend, Spend: Domestic Debt To Increase
- Never the most prudent of spenders, the Egyptian government will maintain an expansionary approach over the
- coming years, as concerns over political stability and economic growth take priority
- TABLE: FISCAL POLICY
- Monetary Policy
- No More Rate Cuts. For Now
- Egypt's monetary easing cycle looks likely to be drawing to a close, and we are leaving our forecasts on hold
- following the 50bps cut in June
- TABLE: MONETARY POLICY
- Investment Climate
- Banking Sector Outlook Promising
- The banking sector has huge potential for development over the coming years, and should drive overall GDP
- growth through increased private-sector lending (from a low base), although government borrowing and low risk
- appetite are likely to keep this muted in 2009
Chapter 3: 10-Year Forecast
- The Egyptian Economy To 2018
- Long-Term Forecasts: A Closer Look
- Egypt faces substantial challenges over the coming decade, but as long as the prevailing economic policies
- remain broadly in place, the future looks bright
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 4: Special Report
- The Fate Of ???Chindia'
- Overview
- Although China and India will continue to grow during the global recession of 2009-2010, they are not immune to
- the downturn, and face a number of risks in the near term
- China And India SWOT
Chapter 5: Business Environment
- SWOT Analysis
- BMI Business Environment Risk Ratings
- Business Environment Outlook
- TABLE: BMI BUSINESS AND OPERATIONAL RISK RATINGS
- Institutions
- TABLE: BMI LEGAL FRAMEWORK RATINGS
- Infrastructure
- Market Orientation
- TABLE: MIDDLE EAST & AFRICA ANNUAL FDI INFLOWS
- TABLE: BMI TRADE RATINGS
- TABLE: TOP EXPORT DESTINATIONS
- Operational Risk
Chapter 6: Key Sectors
- Textiles
- Executive Summary
- In 2007, exports totalled US$2.02bn against imports of US$2.04bn. In that year the country had a US$510mn
- clothing trade surplus, and a US$532mn textiles trade deficit
- Tabl e: Textiles And Clo thing Produc tion And International Trade, 2006-2013
- Shipping
- Executive Summary
- BMI notes that the throughput trends at Egypt's ports mirror the situation in the country's trade sector as a whole
- table: KEY TRADE INDICATORS
Chapter 7: BMI Global Assumptions
- Global Assumptions
- TABLE: GLOBAL ASSUMPTIONS
- TABLE: GLOBAL & REGIONAL REAL GDP GROWTH
- TABLE: DEVELOPED MARKET EXCHANGE RATES
- TABLE: EMERGING MARKET EXCHANGE RATES