Euler Hermes upgrades Egypt’s risk rating, forecasts zero growth this year

Euler Hermes upgrades Egypt’s risk rating, forecasts zero growth this year: Euler Hermes has upgraded Egypt’s risk rating (pdf) to D3 from D4 in its 1Q2017, but expects the economy to record zero growth this year (pdf). Inflation will skyrocket to 26% in 2017, and social discontent will prove to be the biggest obstacle to implementing reform. The credit insurance company lauds the country’s “forceful” reform measures, including the EGP float, as necessary to ensure positive developments for the economy down the road. “Business environment switched suddenly from heavy rigidities (fixed exchange rate, high subsidies) and low liquidity to more market-based ones, but with heavy short-term costs. These reforms were necessary to rebalance the growth model. They also help the country make the most [of] its business regulation, which is among the most favourable in the region.” Egypt’s large domestic markets, diversified economy, “relatively comfortable” external debt repayments, and continued financial assistance from the US and the region are listed among the country’s strengths in its risk rating. On the flipside, the report notes internal and external instability, and persistently high poverty rates among our weaknesses.