Egypt’s economy will face tougher hurdles in 2013

Via Egypt Independent, by Amira Salah-Ahmed; excerpt only, so read on.

Reuters

Talk of economic recovery has all but gone silent in Egypt, replaced by doomsday predictions about the depths to which the country’s dire conditions will spiral.

While the foundations for a robust economy still exist, gross mismanagement continues to add stress to the country’s ailing finances and widening budget deficit. Much like in 2011, the economic turbulence of 2012 mirrored lapses in Egypt’s political transition, and the scenario is likely to carry on well into the coming year.

When asked about the main factor hindering recovery this past year, and which will continue to plague the economy moving forward, five experts cited shortcomings in top-level policy formulation, decision-making and the frailty of the political structure.

Answers ranged from the “volatile domestic political environment” to lack of leadership and vision, the “absence of the state” and, of course, the current state of polarization which is unlikely to be letting up anytime soon.

Angus Blair, founder of The Signet Institute, a Cairo-based think-tank on MENA economies, says, “I do not expect the political ‘noise’ to dampen any time soon given the clear polarization in society, politically, and the slower economy has created further economic problems.”

“The government’s economic plan is going to have to be more creative and brave to build domestic confidence and economic growth,” he adds.

Uncertainty loomed over the market and dented investor confidence in the months following the 25 January uprising, and was further dampened under the rule of the military council and the prolonged transition process. The light at the end of the tunnel — or so it seemed — was the promise of a free and fair election culminating with a democratically elected president who would steer the economy back on track.

What has happened instead is that this uncertainty has gone from hovering threateningly above the economic stratosphere to taking root, and in turn, has struck the core of the state’s finances.