CAIRO: Egypt’s economy will be the largest market in the Middle East by 2050, surpassing Saudi Arabia and emerging as the 19th largest economy in the world, according to a recent report.
Due to substantial improvements in developing markets, education, and demographic shifts, Egypt will be one of the top 30 economies in the world, also trumping the Netherlands and Switzerland, HSBC predicted in its January 2011 report.
However, according to the report, in order to do so the country’s economy will have to progress at a rate of 4 percent over the next 40 years.
Before the January 25 revolution, which toppled former president Hosni Mubarak’s three-decade regime, and demanded democracy, equality, and transparent economic policies, Egypt’s GDP grew to be 5.5 percent. Today, however, with the effect the uprising has had on the economy, it’s around 2.8 percent.
“The problem after the recent events is now investors are on the sidelines not knowing the political direction of the country, [but] once policies start emerging, people will feel more comfortable putting their money in the market,” said Hisham Halaldeen, senior investment analyst at Naeem Holding.
Halaldeen points out that it’s possible Egypt’s economy will eventually thrive, given how promising the country’s market has proven to be in the past.
“There’s no doubt that there’s a lot of value in the Egyptian economy,” he said. “You have good domestic consumption, you have a big population; there is a lot of value in this market that will emerge in the future.”
Over the past few years during the global economic crisis, Egypt’s economy was among the few that recorded growth. In fact, GDP grew to 5.5 percent. However, because the wealth was not evenly distributed in society, there was a drastic gap between classes and the country suffered from a 40.2 percent poverty rate.
“Egypt’s GDP grew during the past years and during the economic crisis; the bigger issue was the distribution of this growth in the economy,” he added. “The growth came but it just wasn’t getting passed [around], that’s where I think the focus has to be; going forward with distribution, so when the economy grows, everyone will feel the effect.”
Samir Makary, professor of Economics at the American University in Cairo and President of Makary Consulting believes implementing old investment policies that were proven to be effective before, while adding new, transparent strategies that can stabilize the country’s political unrest can significantly improve the economy.
“The key is to put a clear policy that’s sustainable so people will have confidence in the economy and invest,” he added. “Egypt’s economy grew during a global economic crisis; we did it before, we can do it again.”
Halaldeen, on the other hand says that the changes following Egypt’s 18-day popular revolt will change the country’s demographics in the long-term.
“It’s a combination of both economic and political stability; things will be better than normal once all the country’s policies are figured out,” he said. “That’s evident in all markets emerging from such situations.”
Reuters reported that Egypt’s economy contracted by an estimated 7 percent in the January-to-March quarter, the country’s third fiscal quarter, a newspaper quoted the finance minister as saying.
"The Egyptian economy contracted 7 percent during the first three months of the current year … according to (Finance Minister) Samir Radwan," newspaper Al-Shorouk reported.
Radwan said he expected Egyptian gross domestic product to grow 2 percent in the current fiscal year, the paper said.
