The country risk in Egypt for 2024 appears elevated due to a combination of factors including high inflation, foreign exchange reserve challenges, and debt refinancing difficulties, despite projected economic growth.
Key Factors Influencing Country Risk in Egypt for 2024:
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Economic Growth: The economy is projected to grow by +3.5% in 2024, a slight increase from the estimated +2.8–3% in 2023. This positive growth trajectory provides a degree of resilience.
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High Inflation: A significant concern is the very high level of inflation. As of December, inflation stood at +33.7%, with food inflation soaring to +79%. Persistently high inflation erodes purchasing power, potentially leading to social unrest and impacting business profitability.
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Foreign Exchange Reserves: Egypt faces difficulties in maintaining an acceptable buffer of foreign exchange reserves. This impacts the country's ability to meet its import obligations and service its external debt.
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Debt Refinancing: There are evident challenges in refinancing debt. This creates vulnerability as the country needs to continuously secure funding to meet its debt obligations.
Summary
While Egypt's economy is projected to grow in 2024, significant risks remain due to high inflation, foreign exchange pressures, and debt refinancing challenges. These factors contribute to an elevated country risk profile.
