Egypt’s economy: The way forward after elections

Assuming the election passes smoothly, Egypt should enjoy an upturn in growth over the next 2-3 years, a report by the London-based research group Capital Economics said Wednesday.

The report said that fiscal consolidation looks set to ease, inflation and interest rates are likely to fall sharply and Egypt should continue to benefit from the boost to competitiveness from a weaker pound.

Additionally, the economy will receive a leg up from the start of production at the giant Zohr gas field. Capital Economics predicts a 5.3-5.5 percent GDP growth in fiscal year 2018/19, up from 4.8 percent last year.

“Beyond the next few years, though, reforms will be needed to raise Egypt’s low investment rate, boost productivity and create jobs for the country’s burgeoning population,” the report said.

The report added that the election is likely to cause few ripples in local financial markets. That said, investors will probably welcome a victory for President Abdel Fatah al-Sisi in the hope that it paves the way for a continuation of the market-friendly shift in policymaking seen over the past 12-18 months.