Egypt’s constitutional crisis continues to cast a dark shadow over the economy. Admittedly, the vote on the new draft constitution passed off more smoothly than might have been expected. But the political situation has become much more polarised and Egypt’s progress towards an IMF deal has been delayed (again). We continue to believe that Egypt will escape a full-blown balance of payments crisis on the basis that an IMF deal should ultimately be secured and that, until this happens, the oil-rich Gulf countries will continue to drip feed aid. But with the political situation highly uncertain and FX reserves dangerously low, Egypt is surviving by the skin of its teeth. Either way, it looks like the economy is in for a bumpy ride in 2013.
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