By Stefano Prandi
At AMGA Investments, we have invested in various projects and initiatives in Egypt, despite the country experiencing severe currency crises and financial turmoil over the past years. Nonetheless, Egypt remains one of the largest economies in Africa and has recently entered into a $35 billion agreement with the United Arab Emirates to enhance a significant section of the local Mediterranean coastline.
This deal holds potential promises for economic recovery and resilience, as it could positively influence Egypt’s capacity to further increase foreign direct investment (FDI).
FDI and Current Account Balances
FDI can directly and indirectly affect current account balances, potentially leading to further deficits. Therefore, it is important to consider several implications when assessing the impact of FDI on developing markets. Although there is a positive relationship between FDI and economic growth, an increase in welfare is not always guaranteed in the long term. Despite its several benefits, it is crucial that FDI in Egypt is managed properly to avoid issues such as the displacement of local businesses and high levels of profit repatriation.
Sources: Business Insider Africa, Reuters, Eurasian Journal of Economics and Finance
