Egypt retains highest economic strength assessment in region, risks remain -Moody’s
Moody’s has stable outlook for North Africa and Levant economies, sees Egypt growing 4-4.5%: Moody’s says a lower energy price environment as well as reform momentum in the region are the main drivers for its stable outlook for the Levant and North Africa economies. In a report on 2017 outlook for the region released yesterday, the ratings agency says “Egypt retains the region’s highest economic strength assessment, which reflects not only its scale but also its growth outlook compared to peers.” It forecasts the Egyptian economy will “grow by 4.0% and 4.5% in 2017-18, supported largely by private consumption, as well as increasing public and private investment. Conditional on a continued stabilization in the security environment, investment will be driven by infrastructure projects and the renewed development of natural resources: the Zohr offshore natural gas field has the potential to restore power supply and meet Egypt’s natural gas demands.”
In addition, “investment incentives from the recent devaluation of the EGP and shift to a flexible exchange rate system to outweigh the short-term challenges stemming from higher inflation and reduced purchasing power for domestic consumers. While tourism arrivals remain near post-crisis lows, they appear to have bottomed out in recent months.” The threats remain present in the potential for socio-economic discontent “fueled by high inflation and reduced purchasing power” and “security risks persist, as evidenced by scattered terrorist attacks targeting security forces and government officials, as well as civilians.”
Sound smart: This is the same Moody’s that agreed a couple of days ago to pay USD 864 mn or so to end a US investigation into its role in helping create the subprime mortgage crisis in the US that set off the Great Recession.