The world economy has been battling many crises for more than two years, from the corona epidemic to inflationary pressures and the war between Russia and Ukraine, and these effects are reflected in the Egyptian economy.
The effects of the current crisis in the economy were evident in the supply chain crisis and rising shipping costs, which prompted many central banks around the world, led by the Federal Reserve, to raise interest rates.
CNBC Arabia conducted a survey with 10 major investors and manufacturers in Egypt on their expectations for the course of the Egyptian economy for the next 2022/2023 financial year.
According to the survey, inflationary pressures on purchasing power and private sector activity are expected to pick up in the financial year starting next month.
Summary of investment risks … and expansion activities
Participants’ opinions differed on the risks of investing in current conditions. 60% of them – 6 respondents to the survey – saw higher risks due to the ambiguity of the scene and the intensity of geopolitical tensions.
Although 30% point out that the risks remain unchanged, they see the current situation as very bad, while one expects the risks to decrease in the next phase.
5 investors suggested a summary of the expansionary activities of the private sector, 4 of them expressed their optimism to increase the sector investments for the next financial year, while one participant expects the stability of investment activities compared to their current situation.
The Egyptian private sector continued its contraction for the 18th consecutive month as BMI data revealed that production and orders in Egypt were down less than 50 points – readers below 50 points indicate a contraction of the economy, while reading above 50 points indicates its growth – in May, it is trading activity and demand ” Indicates a sharp decline. “
Confidence in the role of the Egyptian government in the private sector
As the Egyptian government prepares to strengthen its partnership with the private sector over the next few years, most representatives of the business community supported the success of the project, as 6 investors expected the private sector’s contribution to economic activity to increase to more than 30. % In the next financial year.
Two of the participants saw a decline in the share of the private sector in economic activity in Egypt, and two suggested that its stability should be 30%.
The government has set a target of 65 per cent in the next three years.
Mixed expectations for the growth of the Egyptian economy
Six participants in the survey expect the Egyptian economy to record more than 4% growth in the next financial year, while one participant expressed the expectation that growth will be less than this percentage, while three participants expressed high optimistic expectations, noting that the economy may be. Achieve record growth beyond the 5% barrier.
Egypt has set a growth target of 6.2% for the current fiscal year and 6.7% for the next 2022/2023.
Consumption rates are expected to decline
Most respondents to the CNBC Arabia survey – 70 percent – expect a decline in consumption rates and purchasing power as a result of rising prices and rising inflation.
Only two saw consumers moving towards increased purchases, while only one saw the stability of current rates.
Inflation in Egypt is currently at a 40-month high of 13.1% in Egyptian cities and 14.9% in the entire republic.
We hope the war will end by the end of 2022
Eight investors expressed their optimism that the Russian-Ukrainian war would end by the end of 2022, considering the challenges posed by the freezing of several projects and the expansion of some of their businesses, two participants expected the current war to end in 2023. .
Split in the interest rate path
Five investors included in the survey expect interest rates to rise further in Egypt next year, while 4 expect it to fall, while only one finds interest rates stable under the current circumstances.
The Central Bank of Egypt raised interest rates at its last meeting, bringing the total number of interest rate hikes since the beginning of the year to 300 basis points, liberalizing the exchange rate and reducing the value of the pound by more than 18%.
Gold is the best safe haven for investment
As for the safe havens of investors who took part in the poll, Gold received 4 votes out of a total of 10, 3 of whom suggested investing in real estate and two preferred certificates and bank deposits, but one investor recommended investing in agriculture. Department.
Optimistic forecasts for Egyptian exports
Six investors expected an increase in Egyptian exports in the current year, but 3 of them saw their stability in last year’s levels, while only one suggested their decline.
After the Egyptian government recorded $ 32.340 billion by 2021, it aims to reach $ 100 billion in exports over the next five years.
1- Mohammad Faraj Amar .. Chairman of the Board of Directors of Faraj Allah Holding Group
2- Honey Percy .. Chairman and Managing Director of Edida Food Industries and Chairman of the Export Council for the Food Industry
3- Muharram Helal..Chairman of the Supreme Holding Group, Federation of Investors Associations and Chairman of the Egyptian-Qatar Business Council
4- Khalid Abu Al-Makarem .. Chairman of Makareem Tex and Chairman of the Export Council for the Chemical Industries
5- Samir Araf .. Chairman of the Board of Directors of Al-Ahram Group for Security Organizations and Chairman of the Tenth Ramadan Investors Association
6- Majd Al-Din Al-Manzalawi .. Chairman of the Board of Directors of the Taiba Group for Engineering Industries and Chairman of the Business Council of the Chamber of Commerce
7- Walid Kamal L-Din .. Chairman of the Board of Directors for Insulation Materials of the Modern Company and Chairman of the Export Council for Construction Materials, Refractories and Metal Industries
8- Sheriff L. Sayyid .. Chairman of the Board of Directors of Tredco and Chairman of the Export Council for Engineering Industries
9- Magdie Dolpa is the President of Cairo Cotton Clothes Company
10- Muhammad Junaidy .. Chairman of the Board of Directors of the GMC Group for Business and Business Investment