The Egyptian economy suffers from high levels of public debts, but the inflation is improving faster than expected, Constantinos Kypreos, senior vice president at Moody’s Investor Service said.
Moody’s Investor Service is a main provider of credit ratings, research, and risk analysis.
“We are optimistic about Egypt’s economic outlook. We recognise the reform programme success to achieve high economic rates,” Kypreos said in the conference ‘Future of Investment in Egypt..Vision of Business Community’, held on Monday by the Egyptian Businessmen Association (EBA), Alexandria Businesses Association (ABA), and Egyptian Junior Business Association (EJB).
Kypreos asserted that Moody’s appreciation of the authorities’ efforts to address the current challenges that face the economy, noting that lowering interest rates will lead to attracting more investments to Egypt, especially since unemployment rates remain high.
The Egyptian government took serious steps to decrease its spending through subsidy cuts and slashing wedges into the budget to about 5% of the GDP, he noted.
“The budget deficit is getting narrower which is a positive, but the authorities have to ensure that the segment of less-privileged citizens is well protected from the side effects of the reforms,” he said, adding that the external debt level is relatively good, while the banking system is still solid.
Kypreos also referred to the global economy’s current challenges that can negatively impact the global growth, especially with the US-China tensions that has decreased China’s exports to the US.
Brexit is yet another challenge that will affect both the UK and the European economy, he added.
“The trade tensions affect the global financial stability. The Iran-Saudi Arabia issue is one of the global political risks,” stated Kypreos.
“Globally, we expect lower interest rates for longrun. The US Federal reserve has cut interest rates for the first time since 2009,” he noted, adding that this step will impact the emerging markets positively since it lessens the pressure on the investors to leave emerging markets.