Egypt Economy Facts
Egypt is the most populous country of the Middle East but at the same time one of the poorest. Main sources of income are oil and gas exports, tourism and revenue from the Suez Canal. They are largely managed by public authorities and are dependent on external factors. Politically, the country has moved from socialist central government to greater market orientation, but the military has a key role in the country’s business. The upheavals that started in 2011 created major disruptions in the economy.
Egypt has the best educated elite in the region, but the majority of the workforce is poorly trained. The informal sector (black jobs and more) is very extensive. Economic development has been hampered by rapid Population growth, which has put severe pressure on the scarce cultivation area and the limited water resources. Many who have higher education guest work in other countries, including Saudi Arabia.
- Countryaah.com: Major imports by Egypt, covering a full list of top products imported by the country and trade value for each product category.
Trade liberalization, privatization and deregulation had positive economic effects in the early 2000s, but at the same time increased unemployment. The regime’s fear of social unrest in rising unemployment led to subsidies on food and energy, despite plans to phase them out. Growth was around 7 percent a year from 2005 to 2008. The global financial crisis caused growth thereafter to decline, due to falling revenues from the tourism industry, exports and the Suez Canal, as well as reduced cash flow from overseas Egyptians.
Egypt still managed quite well. The government launched three major stimulus packages, and with a relatively broad economic base and large domestic consumption, the country was soon on track to the same growth levels as before the crisis.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including EGY which represents the country of Egypt. Check findjobdescriptions to learn more about Egypt.
Then followed the political turbulence that began in 2011. The stock market and banks closed, many businesses were hit hard and tax revenue fell. The tourist stream collapsed. The foreign exchange reserve was depleted, the Egyptian pound reached bottom levels and needed investment in agriculture and industry stopped. Growth fell below 2 percent in 2011 and was only slightly higher in the following shaky years. After the 2013 military coup, many western countries frozen aid for a period.
Money shipments from overseas Egyptians fell sharply as several countries rocked during the Arab Spring. Around 300,000 Egyptians are estimated to have returned home mainly from Libya, where many had jobs in the oil industry, due to unrest there.
The tourism industry has traditionally employed over a tenth of the workforce, accounted for around a tenth of the gross domestic product and constituted the country’s main source of foreign currency. But the industry has been going strong, mainly because of the terrorism that has caused several declines since the second half of the 1990s. The outlook was bleak after an attack on a Russian passenger plane in 2015, but since then the Russian-Egyptian contacts have improved. Several collaborative projects have been presented (see Calendar). Following the 2015 attack, Britain also stopped direct charters to the tourist resort of Sharm el-Sheikh, but flights resumed in 2019 when the British considered that Egypt had managed to tighten security at airports.
The situation was also stabilized and growth increased. Improved business climate, sharply reduced fuel subsidies, growing natural gas revenues and expansion of the Suez Canal were contributing causes. About a tenth of the world’s merchandise passes through the channel. It took ten years to build and was completed in 1869. The Suez Canal allowed ships to travel between Asia and Europe without circling Africa – a travel shortening of about 700 miles. After the expansion, which was completed in 2015, the capacity is said to have doubled, so that close to 100 vessels a day can pass. A bridge over and a road tunnel under the canal connects Africa to Asia.
At a major international conference in Sharm el-Sheikh 2015, Egypt received major loan and investment promises. Arab states in the Gulf of Persia promised direct investment for just over $ 36 billion. Loans were also decided for, among other things, a power plant of $ 18.6 billion. International lending institutions pledged SEK 5.2 billion in loans. The government saw the pledges as a strong support for its fight against militant extremists.
At the conference, the government presented plans to build a brand new capital east of Cairo. The foundation stone was laid in 2018 and the investments are based on large loans from China, with the practical participation of Chinese state companies, although the Egyptian military’s business empire has a key role in the project. Among the buildings to be built is a railway to Cairo.
In 2018, Egypt was given the go-ahead to continue raising loans from the International Monetary Fund (IMF), which in 2016 placed a loan package of a total of $ 12 billion over three years in view. However, the IMF demanded austerity that has become noticeable to Egyptians: VAT has been introduced and electricity prices have gone up. When the subsidies on fuel were abolished (June 15, 2019), it was decided to exclude fuels used for electricity production – and for bakeries, as price increases on basic foods can trigger strikes and demonstrations. When the loan expired at the end of 2019, the Egyptian leadership was praised for having implemented reforms and achieved growth.
The reforms included that the currency was allowed to float from the end of 2016, and the Egyptian pound lost much in value. But the pound fared better than many other currencies in the turmoil that spread in the markets when the Turkish economy hit in crisis 2018.
In the fall of 2019, inflation was reported at a low of 2.4 percent, a dramatic improvement over a year earlier when, according to the country’s statistical authority, it was up 17.5 percent. Various explanations were given: firstly, increased agricultural production led to lower food costs (food accounts for almost half of household expenditure) and secondly that the value of the pound against the dollar stabilized.
The budget deficit decreased to 9.8 percent of GDP in 2018. Government debt was declared in 2018 to just under 93 percent of GDP, also a decrease. In early 2020 (growth in an interview survey conducted by Reuters), growth of almost 6 percent was forecast during the year. But that was before the coronavirus had led to the pandemic that has subsequently created dark clouds and great uncertainty about the economic future worldwide.
The results achieved have been achieved by a military-dominated regime. And the role of the state, especially the military, in business is also one of the worrying factors that characterize Egypt’s economy. It is there, not in the private sphere, that the wheels have rolled. And behind the impressive figures shown there is also a flip side: About twice as large a proportion of Egyptians live below the poverty line now as at the turn of the millennium, according to the World Bank.
Egypt has a large deficit in its trade with the rest of the world, while imports are significantly higher than exports. Food, machinery and transport equipment are important import goods.
Oil production is declining, but natural gas, previously only used in the country, has started to export during the 2000s (see Natural Resources, Energy and the Environment). Agriculture’s share of exports has gradually decreased, from over 70 percent a few decades ago to just over 10 percent. But cotton, textiles and ready-made clothing are important commodities.
The EU is the largest trading partner, although China is now the single largest importing country.
Trade with the EU is facilitated by an association agreement from 2004 and barriers to trade have gradually been resolved. The United States offers duty free for goods with a certain amount of Israeli content. Egypt is a member of the World Trade Organization (WTO) and works for a pan-Arab customs union. Trade in the region has increased in recent years, as has the exchange with India and not least China. A free trade agreement with the South American trade block Mercosur was signed in 2010 with the aim of eliminating customs duties within ten years.
Egypt also participated when 44 African states signed a new free trade agreement, AFCFTA, in March 2018. The agreement must be ratified at national level before it can enter into force but is seen by many as an important step towards increased trade exchange within Africa.
FACTS – FINANCE
GDP per person
US $ 2,549 (2018)
US $ 250,895 million (2018)
5.3 percent (2018)
Agriculture’s share of GDP
11.2 percent (2018)
Manufacturing industry’s share of GDP
16.3 percent (2018)
The service sector’s share of GDP
51.4 percent (2018)
13.9 percent (2019)
Government debt’s share of GDP
92.7 percent (2018)
US $ 82,886 M (2017)
US $ 28,046 million (2018)
US $ 57,635 million (2018)
– US $ 6 293 million (2018)
Commodity trade’s share of GDP
40 percent (2018)
Main export goods
oil, food, clothing, textiles, cotton yarn, iron and steel products
Largest trading partner
EU, USA, Libya, Saudi Arabia, China