Amid a brewing storm for emerging markets, Egypt’s finance minister believes his country’s economy can weather what has thrown many others into crisis — as long as the underlying causes don’t get any worse.
Speaking to reporters in Cairo, the recently-appointed Mohamed Maait discussed what the current market turmoil meant for the Middle Eastern country of 90 million.
“It is worrying; however, we are able until now to absorb these negative effects… Egypt’s economy has sources to address this. However, I have to be very honest — up to a limit,” Maait said.
“So hopefully what is happening will be corrected and will move into a stable position, because yes we are absorbing all these shocks — oil prices, emerging market problems, increasing interest rates — but if they continue like that, it will be a problem for us.”
Investors have been stepping away from emerging markets on the back of rising global interest rates and a strengthening dollar, which have made the record-high stock of dollar-denominated emerging market debt significantly more painful to pay off.
Several major emerging economies, including Turkey, Argentina and Indonesia, are seeing their currencies hit record lows, while even India and China are seeing asset values slip amid growing trade war fears.
The MSCI emerging markets index is down nearly 9 percent year-to-date.
Maait’s comments come as Egypt enters a period of solid recovery more than seven years after its 2011 revolution and a series of terrorist attacks sent the economy spiraling.
But the austerity measures behind some of this growth have led to sharply increased living costs for ordinary Egyptians and deepening social discontent.
Egypt reported its highest economic growth in a decade in July, at 5.3 percent for the 2017-2018 fiscal year compared to 4.2 percent the previous year.
The government aims to hit 7 percent growth by 2022, an aspiration bolstered by the International Monetary Fund’s (IMF) forecast of 6 percent growth in the near-term — the highest in North Africa — and a reduction in inflation and unemployment of 7 percent by 2022.