Business Monitor International


Egypt Business Forecast Report

Published 26 February 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Egypt Business Forecast Report

Core Views

  • One the whole, 2014 will be a relatively positive year for the Egyptian economy, as the currency stabilises and investment returns to the county. Sporadic outbursts in public unrest and ongoing 'policy drift' will undermine a more pronounced economic recovery.

  • Egypt will have little choice but to make more pronounced reforms to its domestic energy subsidy system. That said, we do not expect any major reforms ahead of parliamentary elections, which we expect to take place in June 2014.

  • Hikes to domestic energy prices will push consumer price inflation back into the double digits by the end of the year.

  • Egypt's geopolitical importance will ensure that even if an IMF agreement is delayed for longer than expected, further foreign aid commitments will materialise over early 2014. Western powers such as the US and EU have an interest in ensuring the North African country does not experience a more pronounced economic and political crisis. However, it will be donations from the GCC which keeps Egypt afloat this year.

  • We do not expect an IMF deal before H214, as the economic rationale has waned somewhat since the influx of foreign aid and it is politically unpalatable at present.

Major Forecast Changes

  • Following an influx in foreign aid in July and October 2013, it appears as though Egypt will be spared a more pronounced balance of payments crisis until mid-2014. That said, as the aid inflows are likely to weaken the government's resolve to push ahead with necessary subsidy and tax reforms, we do not expect an IMF agreement to be signed in the near term. We are forecasting real GDP growth of 2.5% and 4.2% in FY2013/14 and FY2014/15 respectively.

Key Risks To Outlook

  • A failure to secure external financing (whether through the IMF or bilateral aid) raises the risks of a disorderly devaluation of the Egyptian pound.

  • Egypt may become stuck in a protracted democratic transition, in which case long-term growth would fall well below potential.

...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Referendum A Vote Of Confidence For Interim Government
8
Egypt - Political Outlook
8
Long-Term Political Outlook
10
Four Scenarios For The Coming Decade
10
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Ratings
15
Economic Activity I
16
Turnaround In Economic Growth
16
table: GDP BY EXPENDITURE
16
Full Resumption Of US Aid To Occur in Q214
18
Fiscal Policy
19
Subsidy Reform: Economics To Outweigh The Politics
19
table: FISCAL EXPENDITURE BREAKDOWN
19
Balance Of Payments
21
Outlook Turning Increasingly Positive
21
Monetary Policy
24
Inflation Has Peaked
24
table : MONETARY POLICY
24
Regional: Islamic Banking
25
Islamic Banking: New Markets To Emerge
25
TABLE: Islamic Bonds & Loans (2013)
26
Chapter 3: 10-Year Forecast
29
The Egyptian Economy to 2023
29
Policy Uncertainty Weighs On Outlook
29
table : Long -Term Macroeconomic Forecasts
29
Chapter 4: Business Environment
31
SWOT Analysis
31
BMI Business Environment Risk Ratings
31
Business Environment Outlook
32
Institutions
32
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
32
TABLE: BMI LEGAL FRAMEWORK RATING
33
Infrastructure
34
TABLE: LABOUR FORCE QUALITY
34
TABLE: MENA - ANNUAL FDI INFLOWS
35
Market Orientation
36
TABLE: TRADE AND INVESTMENT RATINGS
36
TABLE: Top Export Destinations , 2001-2009 (US$MN)
37
Operational Risk
38
Autos
39
Chapter 5: Key Sectors
39
table: Autos Sales, 2010-2017
40
table: Autos Production, 2010-2017
40
Food & Drink
41
table: Autos Trade, 2010-2017
41
table : Food Consumption Indicators -Historical Data & Forecasts , 2010-2017
42
table : Alcoholic Drin ks Value /Volume Sales , Production & Trade -Historical Data & Forecasts , 2010-2017
43
table : Mass Grocery Retail Sales -Historical Data & Forecasts , 2010-2017
46
Other Key Sectors
47
table : Defence & Security Sector Key Indicators
47
table: Infrastructure Sector Key Indicators
47
Table : Freight Sector Key Indicators
47
table : Pharma Sector Key Indicators
47
table: Oil and Gas Sector Key Indicators
48
table : Telecoms Sector Key Indicators
48
Chapter 6: BMI Global Assumptions
49
Global Outlook
49
Fairly Benign Prognosis
49
Table : Global Assumptions
49
Table : Developed States , Real GDP Growt H, %
50
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table : Emerging Mar kets , Real GDP Growth , %
51

The Egypt Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Egypt and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Egypt's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Egypt's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Egypt's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Egypt, including currency volatility, the commodity price boom and protectionist policies.

The Egypt Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Egypt economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Egypt through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Egypt Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Egypt and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Egypt, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Egypt over the next 5-years?

BMI's Egypt country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Egypt Market - Political Strengths, Weaknesses, Opportunities and Threats facing Egypt.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Egypt's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Egypt's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Egypt, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Egypt's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in Egypt will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Egypt's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express