ISSN 2330-717X

Egypt: A New Emerging Economy – OpEd

By

Egypt is considered to be a regional and middle power with its economy as one of the important and most diversified in the Middle East. It has high potentiality to be economic bridge between sub-Sahara and Middle East. River Nile and Suez Canal are strategic and economic life-line of the country.

Egypt has one of the longest histories of any modern country, considered birth place of a civilization. Egypt is the most populous country in North Africa and the Arab World, the third-most populous in Africa after Nigeria and Ethiopia. Cairo, the capital city has often been seen as a ‘dual city’ separated between a ‘modern’ European city and a historic ‘traditional’ central. Cairo is the economic center of Egypt, accounts for 11 per cent of Egypt’s population and 22 per cent of her economy (PPP). This city is also center of tourism, manufacturing and financial hub.

According to 2015 estimates it has GDP $307 billion and growth of 4.5% .Textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures are main industries. Egypt exports $27.15 billion goods especially crude oil and petroleum products, cotton, textiles, metal products, chemicals, agricultural goods. Its main imports are machinery and equipment, foodstuffs, chemicals, wood products, fuels. Its gross external debt is $46.1 billion and public debt accounts 88% of GDP with Revenues $70 billion and Expenses $100.8 billion. Automobile, electronics, steel and textile are also well developing industries.

Egypt’s mineral and energy resources include petroleum, natural gas, phosphates, gold and iron ore. Crude oil is found primarily in the Gulf of Suez and in the Western Desert. Natural gas is found mainly in the Nile Delta, off the Mediterranean shore, and in the Western Desert.

The International Monetary Fund (IMF) has rated Egypt as one of the top countries in the world undertaking economic reforms. Some major economic reforms undertaken by the government since 2003 include a dramatic slashing of customs and tariffs. A new taxation law implemented in 2005 decreased corporate taxes from 40% to the current 20%. A series of budget reforms were steered in order to restore weaknesses in Egypt’s economic environment and to boost private sector involvement and confidence in the economy.

Egypt’s economy relies on tourism; remittances received from more than three million Egyptians working abroad and revenues from the Suez Canal. Foreign aid from other countries is also an important source of income, which plays significant role in development of Egypt. Economic conditions have started to improve considerably, after a period of stagnation, due to the adoption of more liberal economic policies by the government as well as increased revenues from tourism and a booming stock market.

Cairo Metro is major transport attraction in Egypt and whole Africa. The main line of the railway and road networks, which is covering major parts of the country. The Suez Canal is a major waterway of international commerce and navigation, linking the Mediterranean and Red Sea.

The Suez Canal is an artificial sea-level waterway in Egypt, the most important center of the maritime transport in the Middle East.

Sign up for the Eurasia Review newsletter. Click here to have Eurasia Review's newsletter delivered via RSS, as an email newsletter, via mobile or on your personal news page.

Egypt is divided by the highly fertile Nile valley, where most economic activity takes place. The White Nile, which originates at Lake Victoria in Uganda, supplies about 28% of the Nile’s waters in Egypt. The Blue Nile, which originates at Lake Tana in Ethiopia, offers an average of 58% of the Nile’s waters in Egypt.

The Egyptian tourism industry is one of the most important sectors of the economy, in terms of supporting high employment and foreign currency. It has many constituents of tourism, mainly historical attractions especially in Cairo, Luxor and Aswan, but also beach and other sea activities. With a lot of touristic activities in Egypt it’s considered a fun place for historical, religious, medical and entertainment tourism.

Manufacturing industries are showing improvements to substitute imports and increase exports. Egypt is the 63rd largest export economy in the world and the 68th most complex economy according to the Economic Complexity Index (ECI). In 2013, Egypt exported $36.4B and imported $69.5B. Crude Petroleum ($6.69B), Petroleum Gas ($2.34B), Refined Petroleum ($2.3B), Insulated Wire ($1.08B) and Nitrogenous Fertilizers ($1.05B) are major export items. Its main imports are Refined Petroleum ($6.56B), Wheat ($2.52B), Crude Petroleum ($1.96B),Petroleum Gas ($1.77B) and Corn ($1.53B)

The top export destinations of Egypt are Italy ($2.74B), India ($2.41B),Saudi Arabia ($2.25B), Turkey ($2.01B) and Germany ($1.88B). The top import origins are China ($7.69B), the United States ($5.15B), Italy ($3.8B), Germany ($3.51B) and Turkey ($3.26B)

During the 2008 crisis and the revolution of January 2011, the Egyptian economy suffered uncertainty, macroeconomic instability, which hit tourism and foreign direct investment. The drop in oil prices affected negatively on Egypt’s energy exports, which is 40 percent of total exports. By that time non-oil export also declined due to Euro zone crisis. At present, even though there are sign of rapid development and affluence, the majority of its population is still struggling with unemployment and heightening food prices in Cairo. The poverty rate in Egypt had risen to 25% of the population.

Egypt Economic Development Conference March 2015 with high level participants from world proposed new capital city near Cairo. Kuwait, Saudi Arabia and United Arab Emirates pledged $4 billion each; whilst Oman said it would provide $500 million BG Group and BP both made a commitment to invest $4 billion and $12 billion respectively. This conference has given a new outlook to Egyptian development and economic reform. However, it would take time to see the result.

*Author is a former expert United Nations, Africa.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.