For those looking for a sunny economic outlook, it might be worth a trip to North Africa countries.
Economic growth in Egypt, Morocco and Tunisia could surge as high as 6%-a-year, according to a new report from London-based firm Capital Economics. But they will only achieve that level with much-needed economic reforms the report’s author Jason Tuvey notes.
The reasons for the optimistic outlook are two-fold. The first is that these economies are starting from a lower base and could theoretically catch up to the richer ones more rapidly by implementing key technologies and focusing on high-productivity industries. Tuvey thinks that these three countries could easily surpass their historical average of 2-3% a year per-capita GDP growth and see their average GDP-per-person grow by 4-5% a year.
The second reason is that the three North African countries have a rapidly growing population, with the workforce set to grow by about 1% a year. Tuvey says that should add 1% to GDP just by new workers joining the workforce.
Combining the two figures, Capital Economics gets the outlook of 5-6% economic growth a year.
But the report warns that the key to continued growth will be government-led economic reform. “One of the key impediments to growth in recent years has been a low rate of investment,” the report states. Establishing economic stability and improving what are seen as poor business environments should aid in pushing these economies “towards strong and sustainable growth.”
Investors are watching closely. After Egypt’s recent conference to promote inward investment Ahmed Heikal, chairman and founder of Qalaa Holdings, one of Egypt’s biggest domestic investors, said: “The issue now is to make sure you follow up on and implement those reforms.”
Source: The Wall Street Journal