Lucas Wurfbain at Insparo Asset Management comments on the long term outlook for Egypt…
The elation of the Egyptian people is palpable but when the dust settles we are once again confronted by the stark reality of the Egyptian economy. Inflation has spiked, unemployment is much higher (82% of people between 15-29 are unemployed) and tourism revenue has slumped.
The country needs a cash infusion otherwise its ability to import fuel and food becomes severely restricted and we can quickly spiral towards crisis. The incoming government needs to provide clarity and stability and restore the normal processes of the country so that foreign lenders, especially the IMF, will continue to provide funds for the country. The terms of these loans will undoubtedly be harsh and this will make the job of the new administration a very difficult one.
We remain optimistic about the long term outlook on Egypt but feel that the next few months will be pivotal for the country.