Egypt, which re-opened its stock market earlier this week, can enjoy a rapid economic rebound but it will require shrewd management to regain ground lost after markets shut eight weeks ago, Oliver Bell, senior investment manager at Pictet, said in a recent note on the country.

Bell explained how Egypt’s precarious economic position, which is mostly down to its need to subsidise its population with a $17 billion annual bill against the rising oil and food prices, is now accounting for the majority of the country's fiscal deficit.

Despite caution about the near term, Bell pointed out that Egypt could mirror the achievement of Turkey in rising rapidly from a relatively difficult starting point. He was commenting as dust settled on the recent political turmoil in Egypt, one of Africa’s most important economies.

The drop in historically strong Suez Canal revenues, tourism, foreign direct investments and portfolio flows could hit the Egyptian currency now that markets have re-opened. It is unclear whether or not the central bank will allow the Egyptian pound to fall or spend some of its $30 billion of reserves to prevent the level dipping, according to Bell.

It is fundamental to Egypt’s economic recovery for the authorities to keep the market open to attract foreign investors, he said.

Bell said Pictet is looking to invest in industrial companies and exporters that will benefit from any depreciation in the currency. However, he pointed out that areas for investors to avoid are real estate companies due to their connection with the previous government.

He concluded that if the Egyptian government can get the economy back on track then the country could enjoy similar levels of growth to Turkey. In 1997, Turkey’s GDP equalled Egypt’s current levels of €220 billion (around $312.5 billion), but the level currently stands at €600 billion. The MSCI Turkey index of the country’s equities has risen by 350 per cent since 1997, compared to the MSCI Emerging Markets index gain of 140 per cent over the same period.

Bell added that if the €30 – 70 billion of funds that the Mubarak regime is rumoured to be hoarding in offshore accounts can be repatriated, then the economy could quickly be on the road to recovery.