Boston, MA -- (SBWIRE) -- 11/01/2013 -- As Egypt's challenging economic environment continues to affect Egypt's consumer electronic market, we expect it to contract by 0.1% in US dollar terms in 2013, but then grow strongly over the medium term. The contraction in 2013 is the result of tightening of credit availability and a depreciation of the local currency, making imported products more expensive. We believe the effect will be strongest for bigger ticket items including TVs and PCs, while handsets will be the only segment to register growth in 2013. Looking further ahead to 2014 and 2015, we expect strong growth across the three consumer electronics segments due to positive fundamentals boosted by deferred purchases from 2013. A number of positive trends will be behind this growth, including accelerating economic growth and the declining price of laptops and tablets, which will tap into the low penetration rate. Handset vendors are increasingly bringing featurephones and smartphones with attractive features to price points that appeal to the mass market in Egypt. Both these trends will be in force over the medium term.

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Headline Expenditure Projections

Computer Hardware Sales: US$834mn in 2012 to US$775mn in 2013, -7.1% in US dollar terms. Lack of credit availability and currency depreciation will squeeze sales as price sensitive consumers defer purchases. Over the medium term, the computer market remains fundamentally strong with low PC penetration, and falling unit prices.

AV Sales: US$377mn in 2012 to US$374mn in 2013, -0.7% in US dollar terms. Flat-screen TV sets the main driver of growth, but sales will be hit by lack of credit and currency depreciation, making imports more expensive.

Handset Sales: US$2.3bn in 2012 to US$2.4bn in 2013, +2.6% in US dollar terms. Only market segment forecast to grow in US dollar terms in 2013. The lower average price of handsets, credit from operators and higher volume nature of the market will keep growth in positive territory as aggressive promotions and Chinese imports maintain the affordability of devices.

Risk/Reward Rating

Egypt's score is 38.2 out of 100, which places it last at 10th in our latest MEA CE RRR table. BMI expects Egypt to attain a higher ranking over time due to the growth potential of its market, particularly in regions outside Cairo, where distribution and retail infrastructures are currently underdeveloped. However, in the short term, economic conditions will keep it at the bottom of the table.

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