Egypt

Renewed confidence in the medium- and long-term outlook for Egypt’s economy is buoying its capital markets, with stocks up strongly in 2012 and bond issues attracting plenty of interest. In spite of lingering political uncertainty, good growth prospects, a large and growing domestic market, and likely backing from the IMF are all helping to restore much-needed investor confidence.

Egypt’s government is working to obtain support for a new economic reform package it has prepared to qualify for a $3.2bn loan from the International Monetary Fund (IMF), though it may be a difficult task to convince opposition leaders and the public to back the plan.

With its large and growing population, expanding economy and sizeable industrial sector, Egypt is an energy-hungry country, and demand for electricity is forecast to double within the next decade and a half. To meet soaring consumption, the country has long been preparing to increase capacity through the construction of several power plants.

Already a key conduit for both European and Asian trans-shipment activity, Egypt is working to gain a greater slice of lucrative regional trade as more land-based freighters look to the country as an alternative entry point to Gulf and African markets.

Prospects are brightening for the Egyptian tourism industry, with renewed growth expected this year after a difficult 2011. Tourism revenues could grow by more than a third in 2012, returning to 2010 levels, the tourism minister, Mounir Fakhry Abdel Nour, told the international press in late December.

Even amidst the ongoing unrest in Cairo and a sliding benchmark index, Egypt’s medium-term economic outlook has begun to offer improved prospects, particularly in light of increased activity in key industries. Recent strong demand, particularly for housing, along with growing infrastructure needs, is set to see a medium-term recovery in Egypt’s construction sector. While a slowdown in 2011 hindered progress and has negatively impacted capital flows, work is continuing on existing projects and major deals continue to be signed.