New Country Views
Egypt: Reform anchor pays off
While the COVID-19 pandemic has not passed Egypt by, the country has managed to weather the storm relatively well. Egypt is set to be the only country in MENA to see its GDP remain in the positive territory at 3.5% growth, a figure most analysts did not forecast at the onset of troubles this year. This week, we analyse the repercussions of the pandemic on the state budget and overall fiscal position.
In our latest monthly issue, we discussed how we expect the CBE to continue to play an active role in helping maintain the recently returned foreign investor confidence. We build on this by analysing how the current macro-management framework and the potential additional USD 1.6B support package from the IMF will likely support recovery next year. Especially amongst oil exporters in the region, there is fear of a wide-bottom U-shaped recovery. Egypt looks set to skate around that puddle, although achieving growth high enough to chip at unemployment could take a few more years of commitment to reform.
Our paper includes a useful section on Sino-Egyptian relations: Despite the ripple effect of the pandemic on Sino-MENA trade and investments, in recent months there has been an acceleration in Chinese transport infrastructure and construction projects in Egypt under the Belt and Road Initiative. We offer you some colour on recent projects Chinese investors have entered. The BRI themes of Connectivity, and Logistics, are ever more prominent in Egypt, and for this country, they will be game-changers.