Egypt has been through what Philippe Dauba-Pantanacce calls a “perfect storm.” The Suez Canal’s income and tourists have been cut off, and there are many conflicts in the area.
“Egypt has had its problems, but the country is too important to the rest of the world…” It is a key player in a difficult region from a geopolitical point of view, as Dauba-Pantanacce, Senior Economist and Global Geopolitical Strategist at Standard Chartered Bank, told Business Today Egypt in an exclusive interview.
Dauba-Pantanacce talked about how these wars have a big effect on Egypt’s main sources of income and said that the country has been strong in the past when it faced similar problems after the Arab Spring. He also said that ending disputes could bring Egypt important new sources of income.
Investors think that Egypt has been able to handle these problems, which is a good sign, he said.
“There are times when I think Egypt has almost passed one of the worst tests it could have faced…” I think buyers now think that things have gotten better.
The economist said that Egypt’s big population and customer market could make it a good place for European countries to move their production facilities as they think about nearshoring, friendshoring, or moving them closer to home.
He told Business Today that as Europe moves away from getting its energy from Russia, Egypt may be able to play a bigger part in the energy dynamics and supply chain restructuring in the area. It might also be more appealing because it is close to Europe and has a lot of natural gas supplies.
Trade and the Gulf Railway
The Gulf Railway, a plan for a train network to link all six GCC states, was put forward as an alternative to the Suez Canal. It has caused some concern as the Suez Canal continues to deal with new problems that make it harder for ships to use.
But Dauba-Pantanacce says that maritime trade can’t be completely replaced. They say that land routes may help bring people together in the region, but the sheer size and economic efficiency of maritime shipping mean that land routes won’t be able to replace much of the maritime trade that goes through the Suez Canal.
What about the other hand? Could the Gulf Railway help Egypt’s big plan to boost exports during President El-Sisi’s administration?
The economist at StanChart said that Egypt could have a big chance when the railway is built. The development of the land route would make trade with nearby Gulf countries easier and open up new ways for the economy to grow.
Dauba-Pantanacce thinks that Egypt could become a major production base for the Gulf because it is close to the GCC market.
He pointed out that there is a clear lack of production facilities, especially in areas like textiles and machines, because Gulf countries’ economies are built on oil.
“I think that countries that don’t have as many natural resources tend to make up for it by making more factories.” As with Turkey, which is a good example to use to compare Egypt to because Turkey has become a more important place for Europe to make things in recent years.
The geopolitical economist thinks that both Egypt and the GCC could benefit economically from improving connectivity through rail and road paths. This is because Egypt could make and sell local goods to its neighbors, which would improve trade and relations in the area.