The Golden Cross on the US dollar can control inflation rates
The Golden Cross on the US dollar can control inflation rates. The dollar is up 4% from its low of 2021 and is among the world’s best-performing currencies this year. We believe that the US dollar sustained growth can push down foreign currencies and boost their recoveries such as Euro and British pound. On the other hand, we should worry that as the dollar strengthens, emerging economies will have divergence in growth. In the case of Egypt, we can see that is positively affected according to the IMF’s growth rates projections reaching 5% in 2021. Noting that manufacturing exports has increased drastically in the last year. Therefore, Egypt has an optimistic outlook during its recovery period.
- Moving to Egypt's energy sector, the government raised fuel prices up by 3.8% amidst a rise in inflation rates.
These prices will remain fixed until Q3-2021. The price of oil has increased 43% in the last year because of increasing demand. It is worth mentioning that the US Fed has expected that inflation rates will go down in the middle of the 2022 fiscal year as demand returns to its normal level. And this can potentially relax oil price hikes.
- And for Egypt industrial sector, Egypt spent 6 bn EGP in introducing industrial utilities in Qena and Sohag.
This is part of a wider implementation project in Upper Egypt that consists of the health of citizens, improvement of electricity, and implementation of small to medium projects in order to diversify its local economy. It is worthy to highlight that around 55% of upper Egypt employments are agriculture-related and this initiative could introduce less vulnerability to the Egyptian market by diversifying its economy.
- Equally important, Egypt’s non-oil exports hiked 23% Y-o-Y during H1-2021 reaching 15.4 bn USD, compared to 12.5 bn USD in H1-2020.
The country plans to eventually export goods worth 100 bn USD every year. We strongly believe that increasing exports is one of the key targets of the government’s new structural reform program which is pledged to ramp up exports in manufacturing, telecoms and IT, and agriculture.
- Consequently, in the same token, Egypt ranks 4th in the Economist Normalcy index.
The normal index measures resiliency and economic behavioral change. Many economies saw their consumer behavior change because of COVID-19. Advanced economies were able to afford market disruption and their demand change. On the other hand, Egypt’s consumer demand behavior has slightly changed during the pandemic. Hence, sectors such as real estate and manufacturing were able to quickly recover.
- In addition, for Egypt Tourism talks, the Long-awaited flights between Russia and Egypt’s Red Sea resorts will resume on August 9th, after a six-year hiatus.
This could help the government to achieve its tourism targets. The government wants to bring in between 6-9 bn USD in tourist revenues this year, up from 4 bn USD in 2020. Revenues reached 3.5-4 bn USD during the first six months of 2021 after 3.5 million tourists visited the country. The return of Russia-Red Sea flights could eventually bring in some 3 bn USD in annual tourism revenues.
- Regards, Egypt’s investment talks, Suez Canal Economy signs a contract with Mercedes to establish a logistics center in Ain el Sokhna.
We believe that this step is important by Mercedes to support the automotive industry in the economic zone.
- Moving to companies talks, it is worth mentioning that the general assembly of "Pioneers Holding" approves dividing the group into 3 companies to provide more specialized investment alternatives for investors.
Inclusion in the investment portfolio through the real estate sector, the industrial sector, or the financial services sector.
- Finally, for our COVID-19 updated story,
a new preliminary study into the performance of the Pfizer/BioNTech vaccine in Israel were made on small-scale. Pfizer Inc.’s Covid-19 vaccine provided a strong shield against hospitalization and more severe disease in cases caused by the contagious delta variant in Israel in recent weeks, even though it was just 39% effective in preventing infections.
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