Investment pledges could transform Egypt's economy

Subject

Egypt's business climate.

Significance

After several years of upheaval, Egypt is experiencing greater political stability and improved economic governance. This is creating a more comfortable domestic investment climate, encouraging consumption and unleashing pent-up demand. Yet the challenge of attracting foreign investors remains, particularly given pressures on the foreign exchange markets and energy sector.

Impacts

• The government should ensure short-term stability, but this is unlikely to last in the longer term absent a political accommodation.
• Recent stock market activity signals strong appetite for initial public offering (IPOs).
• The suspension of capital gains tax indicates flexibility and pragmatism of policymakers towards business challenges.
• Gulf and Chinese investors will not be deterred by human rights issues or rising terrorism incidents.
• Rapid foreign investment growth will bolster the legitimacy of President Abdel Fattah el-Sisi.