Egyptian policymakers’ commitment (or lack of) to economic orthodoxy continues to provide cause for concern and, while we don’t share the view that sovereign default is a serious risk, the near-term economic outlook is challenging. Over a longer horizon, though, Egypt has enormous economic potential. We expect some progress in addressing the structural issues holding back growth, allowing the economy to achieve growth rates of around 5-6% over the next two decades. However, income convergence is likely to be slower than in many Asian economies at a similar income level.
In view of the wider interest, we are also sending this Middle East Economics Focus to clients of our Long Run Economics service.
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