Egypt in transition

Sweeping changes are forthcoming for Egypt as it undergoes transition to a civilian government. The political crisis that saw a change in leadership has simmered, and whilst the military continues to rule, an election is being planned in September for a smooth transfer of power. For the meantime, the country has been trying to restore normalcy as it strives to keep its economy running. Prior to the revolution, Egypt had been projected to post economic growth of at least 6%. The crisis dragged down positive prospects and concerns amongst foreign investors appeared to have created a dent into the country's business and investment climate.
The second half of the year is seeing some positive signs. For one, some sectors were unaffected by the political unrest and businesses are returning to normal operations. Standard Chartered expects Egypt to post real GDP growth of 1.4% for fiscal year 2010/2011. According to the bank, month-on-month inflation started to moderate in May at 11.8%, after recording 12.1% in April, whilst the stockmarket appeared to have gained in May with of 10.4% growth. But most analysts see challenges ahead and a firm economic policy is needed to push Egypt back on its track.

Higher budget to drive growth
Egypt's Cabinet recently approved a budget amounting to $83 billion which reflects higher spending in social programmes to meet the growing demands of the people. A budget deficit of 8.6% of GDP has been set, lower than the 9.5% for the current fiscal year. The current budget focuses on social welfare and human development, whilst cutting down on external borrowings.
The country has also started securing loans from foreign sources in order to meet its spending plans. However, it decided to drop an original plan to obtain $3 billion loan from the International Monetary Fund (IMF). World Bank already announced its willingness to provide funding amounting to $4.5 billion. Other neighbours are also extending their support. For instance, Qatar had provided Egypt with $500 million for budgetary support whilst Saudi Arabia reportedly offered a similar amount.

Challenges and opportunities
Egypt's plastic industry continues to move ahead even in the wake of the current political situation. This means too that investment prospects into the sector are viewed as promising. One example is the recent decision of a joint Egyptian- Indian venture, Egyptian-Indian Polyester Company (SAE), to construct a PET plant in Ain Sokhna at a cost of $160 million.
 The facility will have a production capacity of 1,200 metric tonnes (MT) daily or 420,000MT of PET plastic chips annually. These plastic products will include bottles, food containers, bottled water, bottled drinks, shampoos and cosmetics.
SAE is a joint venture of Dhunseri Petrochem and Tea Ltd, Egyptian Holding Company for Chemicals, and Enppi The facility is being set up in the free zone area of Ain Sokhna, just northwest of Egypt's Suez Gulf. The plant is expected to start production in December 2012. The plant will be the first of its kind in the North Africa region and one of the largest of this kind in the entire Middle East. More foreign currency is expected to flow into Egypt as the new plant is expected to export 80% of its production, and this will benefit the Egyptian economy. About 500 direct and indirect jobs will be created because of the project.