Egypt defies time to complete new Suez Canal project

The inauguration of the new Suez Canal is an evidence that the stability has returned and that an environment exists in which things can be done: businesses can grow, banks can lend, and people can hope, Forbes Magazine reported.

"It’s good news economically. The canal’s own officials believe that the expansion will increase the number of ships per day using the canal from 49 to 97 by 2023, will generate $13.2 billion by 2023 up from $5.3 billion today, and has achieved all this two years ahead of time," the magazine's economic analyst Chris Wright said.

An $8 billion project largely funded through investment certificates, it also demonstrated the liquidity that is available in Egypt for the right investments (although some would prefer that this had been tapped for a wider range of projects than just the Suez Canal), he added.

Hisham Ezz Al-Arab, the chief executive of Commercial International Bank , Egypt’s largest private sector bank, said that the country is emerging from volatility in decent shape, Wright quoted Hisham as saying.

“The worst is very much behind us,” he says.

His own bank’s results are improving dramatically: between the 2013 and 2014 financial years, market capitalisation rose 52.31%, pre-tax profits 32.56% and total assets 26.43%.

There is some broader empirical evidence to support this positive view. Earlier this year Moody MCO -0.23% upgraded Egypt to B3, the first upward notch after six downward ones in the wake of the revolution.

Egypt continued to grow at 2.7% on average per year from 2010 to 2014 despite the volatility around it, partly because it has an enormous (and statistically invisible) grey market economy which apparently never slowed.

Earlier this year Moody’s said consensus forecasts were for 4.5% growth in 2015 and 5% in 2016, although there are continuing concerns about inflation pressures, foreign exchange reserves, the fiscal deficit, and government debt as a percentage of GDP.

The Suez Canal expansion is a great achievement and will help Egypt present itself on the world stage as a country going in the right direction.