Egypt's Economic Prospects 2013
The World Bank (WB) recently released a report on Global Economic Prospects, and predicted that by June 2013, Egypt’s Gross Domestic Product (GDP) will have risen to a “modest” 2.6% pace. “Policy uncertainties, a deteriorating reserve position, and domestic unrest negatively impact economic activity,” the report explains.
Following are brief statistics mentioned in the report about some factors influencing the slow economic recovery and some facts connected to them:
1. Industrial Production: Egypt witnessed an 18%-decline on an annualized basisi in industrial production in the three months to October 2012, compared to Q2/2012.
2. International Reserves: Egypt’s international reserves fell from the equivalent of over 7 months of merchandise imports in January 2011 to about 3 months by November 2012 (fell about half a billion dollars). Reserves in general could create difficulties if Egypt keeps delaying or halting future aid disbursements, which would lead to balance of payments difficulties.
3. Tourism: Egypt recorded stronger gains in tourism attraction, yet it still remains below the 2010 level.
4. Export Volume: Egypt experienced an export volume decline of 10 percent (annualized) in the three months to July.
5. Inflation: Fuel and food subsidies, together with weak growth and subdued domestic demand, caused inflation to fall to 4.3 percent in November, but inflation rose again to 5.6 percent in December. Headline inflation dropped to 6.2 percent on a year-on-year basis in September, the lowest in more than two years.
6. Private Capital Flow: In Egypt, it is likely that the private capital flow will remain weak due to political tensions, yet in years to come, flows into non-oil economic activities should rebound as these tensions are gradually resolved.
7. Foreign Investment: Since Egypt is an oil importing countries, foreign investment inflows remain subdued.
8. Migrant Remittances: The rise in the region’s migrant remittances to families and friends is mainly led by Egypt, as inflows rose 26 percent in 2012, to $18 billion.
9. Currency: As Egypt is an oil-importing country with low reserve buffers, its currency remains vulnerable.
Of course, the Global Economic Prospects report also refers to the possible IMF-loan, which Egypt is discussing at the moment: “In Egypt, the expected approval of a substantial IMF program in 2013, together with the release of other multilateral and bilateral assistance contingent on the IMF program, would arrest the deterioration in external balances, while significant cuts to fuel subsidies and tax reforms, if implemented as planned, will bring the fiscal position to a sounder footing and free up resources for the private sector.”
On a regional scale, the Middle East’s GDP growth is expected to slow 3.4% in 2013, yet a rise of 3.9% is foreseen for 2014 and 4.3% in 2015. Among oil importers in the region, activity declined sharply at a 9.8 percent annualized pace in the third quarter as political uncertainty in Egypt, Jordan and Morocco weighed on economic activity. Also, the combination of domestic disruption and weak Euro Area demand has seen export volumes plummet.
The complete report can be downloaded here:
http://www.egypt-business.com/Whitepaper/details/1304-Global-Economic-Prospects-2013/6789
Following are brief statistics mentioned in the report about some factors influencing the slow economic recovery and some facts connected to them:
1. Industrial Production: Egypt witnessed an 18%-decline on an annualized basisi in industrial production in the three months to October 2012, compared to Q2/2012.
2. International Reserves: Egypt’s international reserves fell from the equivalent of over 7 months of merchandise imports in January 2011 to about 3 months by November 2012 (fell about half a billion dollars). Reserves in general could create difficulties if Egypt keeps delaying or halting future aid disbursements, which would lead to balance of payments difficulties.
3. Tourism: Egypt recorded stronger gains in tourism attraction, yet it still remains below the 2010 level.
4. Export Volume: Egypt experienced an export volume decline of 10 percent (annualized) in the three months to July.
5. Inflation: Fuel and food subsidies, together with weak growth and subdued domestic demand, caused inflation to fall to 4.3 percent in November, but inflation rose again to 5.6 percent in December. Headline inflation dropped to 6.2 percent on a year-on-year basis in September, the lowest in more than two years.
6. Private Capital Flow: In Egypt, it is likely that the private capital flow will remain weak due to political tensions, yet in years to come, flows into non-oil economic activities should rebound as these tensions are gradually resolved.
7. Foreign Investment: Since Egypt is an oil importing countries, foreign investment inflows remain subdued.
8. Migrant Remittances: The rise in the region’s migrant remittances to families and friends is mainly led by Egypt, as inflows rose 26 percent in 2012, to $18 billion.
9. Currency: As Egypt is an oil-importing country with low reserve buffers, its currency remains vulnerable.
Of course, the Global Economic Prospects report also refers to the possible IMF-loan, which Egypt is discussing at the moment: “In Egypt, the expected approval of a substantial IMF program in 2013, together with the release of other multilateral and bilateral assistance contingent on the IMF program, would arrest the deterioration in external balances, while significant cuts to fuel subsidies and tax reforms, if implemented as planned, will bring the fiscal position to a sounder footing and free up resources for the private sector.”
On a regional scale, the Middle East’s GDP growth is expected to slow 3.4% in 2013, yet a rise of 3.9% is foreseen for 2014 and 4.3% in 2015. Among oil importers in the region, activity declined sharply at a 9.8 percent annualized pace in the third quarter as political uncertainty in Egypt, Jordan and Morocco weighed on economic activity. Also, the combination of domestic disruption and weak Euro Area demand has seen export volumes plummet.
The complete report can be downloaded here:
http://www.egypt-business.com/Whitepaper/details/1304-Global-Economic-Prospects-2013/6789