Egypt - Overview
To make a call from: 00
To make a call to: +20
Since the political crisis that led to the downfall of the regime of Hosni Mubarak, Egypt has entered a period of uncertainty and the future direction of economic policy is unclear. The politics of austerity measures which the government had adopted hoping it would obtain a loan from the IMF led to a rise in social tensions and sparked off numerous strikes. In 2013, after three years of chronic instability, a military coup supported by a large majority of the population led to the destintution of Mohamad Morsi. The announced 8.8 billion EUR in financial aid promised to Egypt by Saudi Arabia, Kuweit and the United Arabic Emirates reassured the markets; however, tourism, the key sector of the Egyptian economy, remains very badly affected by the political instability. The fact that the rating agency Standards & Poors increased the country's rating at the end of 2013 is a proof of this new rise in market confidence. However, the country's economic situation remains worrisome: the budget deficit, the internal and external government debt have increased significantly and the state finances continue to deteriorate. In order to support the economy, the interim government has decided to pursue an expansionist fiscal policy and a policy of public investment in infrastructures. The suppression of energy subsidies has also been announced. The Egypt depends on donors and has been trying to diversify the sources of its financial aid. A far-reaching economic reform is needed and progress must be made in terms of social justice.
The social situation is worrying. The official unemployment rate, which has reached its highest levels of the past 11 years, is close to 13% of the workforce. 75% of all employees work in the illegal economy and 18% of the population lives below the poverty line.
Egypt remains a country with little industry. With its diverse natural reserves (gold, minerals, iron, oil and gas), oil and gas-related activities and the secondary sector account for just over a third of the GDP. Egypt is the world’s sixth largest exporter of natural gas.
Finally, the tertiary sector represents around 50 % of the Egyptian GDP and employs 45% of the population. It is largely dominated by revenues from telecommunications and from tourism (the tourist industry brings nearly 10b in annual revenues).
In spite of its economy’s diversification, the country still depends for a large part of its income on the Suez Canal.
Foreign trade overview
Its three primary export partners are the European Union, which represents more than a third of the trade, United States and Syria. The EU and the USA absorb almost 60% of Egyptian exports. Egypt mainly exports mineral fuels and oil, cotton, iron and steel. It imports mainly consumer electronic goods and capital goods, nuclear reactors and nuclear-powered boilers, cereals, food products and chemical products.
Egypt has a trade deficit. In 2012, the economic slowdown in Europe lead to a weaker demand for Egyptian exports, while the import bill grew due to a rise in the price of grain and raw materials (timber, iron). The deficit therefore deepened in 2012, then diminished in 2013 due to exports rising more quickly than imports. A worsening of the trade balance is expected in the coming years.
Having dried out due to the global economic crisis and later in 2011 the sociopolitical revolution, FDI inflows recovered in 2012. According to official estimates, FDI flux have risen by 33% in the course of the fiscal year 2012-2013. According to the World Investment Report 2013 published by the UNCTAD, Egypt is the 7th largest recipient of FDI in Africa. FDI comes mainly from the European Union, the United States and the Arab countries. Investments focus primarily on tourism, construction, telecommunications, financial services, energy, and healthcare.