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Economic Indicators
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Sectoral Contribution to GDP (2016/17)
GDP Growth Rate Sectoral Contribution to GDP (2016/17) The GDP growth rate has a stable rise from the year 2012 to 2016, especially the trend of continuous and accelerating momentum in growth from is worth highlighting, from 2.2% in 2013/2014 to 4.3% in 2015/2016, this illustrates the economy’s quick responsiveness to improving political circumstances and the right policy signals. Although Egypt has faced many hurdles along the way especially the 2011 political unrest where the GDP growth rate reached its lowest point, in 2010/2011 being 1.8% nonetheless Egypt was still able to recover and return to political stability from 2012 to 2016 and tackle the country’s economic constraints. Sector Contribution to GDP: In 2015/16 the Industrial sector was the top sector performer as the sector contribution to GDP reached 17.1% followed by the retail sector and agriculture sector, recording 14.1% and 11.9% respectively. Industry: Currently, Egypt has 114 industrial zones well distributed among the Egyptian governorates. The sector is one of the highest sectors that witnessed development activities as: 13 zones have been supplied with utilities in the FY 2015/16 compared with 8 in the previous year. Allocation of 3.6 Mn. Sq. meter in 2015/16 compared with only Sq. meter in 2014/15. 2016/17 plan includes the development of three industrial zones: in Qina and Al-Fayoum and simplifying 50% of the regulatory investment procedures. Retail: Egypt's retail market is undergoing a gradual modernization process. Existing large malls, such as the City Stars and Cairo Festival City, are home to increasing numbers of international brands - a result of increasing awareness and demand. The country has a young population with almost a third of the total aged years old, the key age bracket for retail spending. Agriculture: The country’s agriculture base accounts for close to 15.7% of GDP in (2014/2015), and supplies high-quality inputs to the country’s competitive and diverse food processing industry. Thousands of Feddans in six governorates are available for reclamation within the FY 2016/17. This in addition to the “The development of 1.5 million feddan” Mega project which we will talk about in details in the coming slides. The implementation of the joint farms projects with the African countries (Zambia - Zanzibar Niger) and the establishment of model farms in each of the (Sudan, Uganda, and Ethiopia). Concerning legal reform, four laws related to the agriculture sector are under consideration of which the farmers syndicate law. It is worth mentioning that, projects working in the agriculture sector are granted 10 years tax exemption as per law 91 of 2005. Real Estate: The value of investments in new urban societies is expected to continue increasing, as dozens of planned mega-projects and public works initiatives mean that the contracting industry is facing a sizeable project pipeline across all segments of the market. Property suitable for the low to middle income population is likely to see the highest demand over the several years. The government plans to increase the number of new cities from 27 to 59 by the end of 2017. Construction: The construction sector is one of the promising sectors that underpin the government plans to achieve the desired sustainable development. As it is one of the most promising investment sectors in Egypt The government has targeted in the sustainable development plan for the FY 2016/17 : 22.5% of the total investments (which is 570 billion EGP) to be directed to the construction sector. The total implemented investments in the FY 2015/16 have reached Billion EGP of which 12.9% in the construction Sector. Source: Central Bank of Egypt
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14.5 % increase in FDI inflows…
The Net FDI in Egypt rose by 14.5% to USD 7.9 billion,, mainly driven by the increase in net inflows for oil sector investments by USD 1.8 billion to USD 4.0 billion. USD billion Source: Central Bank of Egypt
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Sovereign Credit Rating
Revised Egypt’s Sovereign Credit outlook from “Stable” in November 2016 to “positive” in November 2017 According to Standard and Poor’s (S&P), Egypt’s credit rating went from negative in May 2016 to Stable in Nov to stand at B- after the flotation of currency. Moody's credit rating for Egypt was last set at B3 with stable outlook. Moody’s forecast Egypt’s economy to grow by 4.0% to 4.5% in , supported largely by private consumption, as well as increasing public and private investment. Fitch's credit rating for Egypt was last reported at B with stable outlook. Despite a series of negative shocks, Egypt retains the region's highest economic strength assessment, which reflects not only its scale but also its growth outlook compared to peers. On the funding side, Egypt benefits from dedicated domestic funding bases that reduce their reliance on external borrowing, even at high debt levels and gross financing needs which in 2017 range from 55.6% of GDP in Egypt. Investment incentives from the recent devaluation of the Egyptian pound are expected to outweigh the short-term challenges stemming from higher inflation and reduced purchasing power for domestic consumers. Egypt has implemented a number of credit-positive reforms in 2016 as part of its three-year $12bn loan program with the International Monetary Fund (IMF) in November These included the introduction of a value-added tax (VAT) in August 2016 and the switch to a flexible exchange rate system, in addition to further fuel subsidy reforms in November. The importance of these credit ratings also lies in their ability to influence investor decisions, and at times even affect the CBE policies. They grant countries access to global markets and attract investment funds to the domestic market, injecting it with much-needed liquidity. Additionally, credit ratings facilitate loans and increase their cost effectiveness, preventing investors from repatriating funds and reducing borrowing costs based on Egypt’s enhanced ability to fulfill its obligations. Forecasts Egypt’s economy to grow by 6.0 % in Rated Egypt as “Stable” in May 2015 Last rated Egypt’s Sovereign Credit outlook in January 2018 as “Positive”
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