Business leaders and analysts watching Egypt expect investment to “take off” as the government’s reform program begins to bear fruit, writes the Financial Times’ Heba Saleh as part of a special series of reports on investing in the Arab world. Investors, including US multinationals are “looking with interest” at the Egyptian market now that the government has adopted legislation such as the Bankruptcy Act and addressed power shortages. Many of them have been watching from the sidelines to ensure that the government will push ahead with the necessary reforms, says AmCham President Tarek Tawfik.

The lag between the implementation of reforms and the inflow of FDI is understandable, says EFG Hermes’ head of macroeconomic analysis Mohamed Abu Basha: “It takes time for demand to recover after macro adjustments like the one Egypt went through … starting next year, we will see a pick-up of FDI as demand rebounds.” Abu Basha expects demand to continue rising as interest rates drop, creating the “perfect storm” for investment. Business leaders are still complaining, however, about bureaucracy and competition from state institutions expanding their involvement in the economy, Saleh notes.

The series also looks at how fiscal strains and economic realities have been weighing down Saudi Arabia’s reforms. Saudi’s economy has been slowing since the oil price crash of 2014, slipping into a recession last year and compounding very weak growth in the non-oil sector in 2016. Foreign direct investment in Saudi Arabia fell to USD 7.5 bn in 2016 from USD 8.1 bn in 2015, writes the FT’s Simeon Kerr. “Lost in the optimistic noise are the considerable fiscal difficulties that remain across the Gulf, along with bureaucratic challenges, deteriorating credit standings and rising interest rates,” says Nomura Asset Management Middle East CEO Tarek Fadlallah. Optimism still pervades the Saudi story, with Kerr noting the importance of the FTSE emerging market classification and the upcoming MSCI upgrade.