It is not hard to find evidence of Egypt’s extensive informal economy. It is present everywhere from the rickety microbuses that are poor Egyptians’ main means of transport, to the myriad small businesses which repair, build, supply and otherwise serve the needs of this population of some 85m people.
A World Bank report on the Egyptian labour market released on Wednesday, finds that informality in employment has been deepening, meaning that the proportion of Egyptians in poor-quality jobs without written contracts or social security has been rising, even during years of higher economic growth in the past decade. Continue reading »
By Dalibor Rohac, Cato Institute
Abdel Fattah el-Sisi’s landslide victory in the presidential race, with over 93 per cent of the popular vote, is a result not only of his undeniable popularity among some parts of the Egyptian public, but also of the repression of media and political competition that preceded the election. Following the coup in July 2013, more than 16,000 people have been imprisoned, for crimes that included criticizing the military regime on Twitter.
If el-Sisi’s victory raises doubts about the future of democracy in Egypt, it also leaves unanswered a host of pressing economic concerns. By any account, Egypt’s economy is in a worse shape than before the events of the Arab Spring. The official unemployment rate in the first quarter of 2014 was at 13.4 per cent, up by 0.2 per cent relative to the same period last year. Compared to 2010, the number of unemployed has grown from 2.4m to 3.7m. Some 26 per cent of the population is living under the official poverty line, set at around $1.50 a day. Continue reading »
With Egypt’s presidential election approaching fast, representatives from the Egyptian government and financial community travelled to London this week to seek support from international investors for the country’s much needed reform programme.
Speaking at an Egypt day event at the London Stock Exchange on Friday, Hany Kadry, Egypt’s foreign minister, said he hoped to see “massive participation” in the presidential election on May 26 and 27 and parliamentary polls that will follow in the autumn. Continue reading »
Who says military rule is bad for stock markets? The EGX30, Egypt’s main stock index, is now over 7,700 – a level not seen since mid-2008.
The index has surpassed the previous post-Lehman high before the removal of president Mubarak, which was just over 7,600 in April 2010. Continue reading »
By Richard Asquith of TMF Group
It has been a difficult three years for Egypt, both politically and economically. The euphoria following the toppling of President Mubarak has given way to violent turmoil and a sharp decline in the country’s traditional economic drivers: exports, FDI and tourism. GDP growth has fallen from 7 per cent in 2009 to just over 1 per cent today and, with unemployment rising to over 13 per cent and a national debt equivalent to 89 per cent of GDP, major economic surgery is required. Continue reading »
Egyptians queue up to cast their vote on a new constitution in Al-Haram in the southern Cairo Giza district on January 14, 2014.
Egypt goes to the polls – again. This time on a new constitution, which would give the military freedom from civilian oversight. Here are the main news and views. Continue reading »
By Dalibor Rohac of the Cato Institute
How does one save an economy on the brink of bankruptcy? In Egypt, the answer seems to be a stimulus plan. Egypt’s finance minister, Ahmed Galal, announced that starting in January the government will increase the planned stimulus package by 25 per cent to a total of $4.36bn.
All of this is happening at a time when the country’s budget deficit is at 14 per cent of GDP, and the growth in public debt – currently at 87.5 per cent of GDP – is out of control. Continue reading »
A graphic look at Egypt's economy | Click to enlarge
With the military reoccupying centre stage in Egypt, what does this mean for democracy and the economy? Since the July ouster of President Mohamed Morsi, detentions have continued and more than 1,000 of his Muslim Brotherhood supporters have been killed. The FT’s special report on Egypt takes a hard look at the country’s political and economic future, writes Peter Chapman. Continue reading »
By Dalibor Rohac of the Cato Institute
Following the military takeover and the bloody crackdown on the followers of the Muslim Brotherhood, Egypt has been living through intermittent violence and unrest. Incidence of violence directed against the country’s Coptic minority seems to be on the rise, as does the activity of Islamists operating in the Sinai Peninsula. In short, this seems to be a very odd moment to discuss the arcane details of Egypt’s subsidy programmes.
However, the problem of energy and food subsidies is one of the most significant challenges facing Egypt today. Regardless of what political future looms for Egypt, a reform of subsidies is necessary to avert an approaching economic catastrophe. Continue reading »
By Anthony Skinner of Maplecroft
The Egyptian economy is being propped up by loans, grants, direct deposits and fuel shipments worth billions of dollars from Saudi Arabia, Kuwait and the United Arab Emirates following the toppling of former president Mohamed Morsi and removal from power of the Muslim Brotherhood (MB) in July this year.
Although such aid has allowed Egypt’s authorities to launch ambitious spending on infrastructure to jump start the economy, it also allows them to postpone painful but necessary structural reforms. Continue reading »
The news out of Egypt may seem unremittingly bad of late but here’s something to cheer equity investors: the benchmark Cairo index, the EGX30, is back above 6,000 points this week, a level not seen since before the toppling of former president Hosni Mubarak way back in January 2011.
In fact, the EGX30 was one of the best performing indices worldwide in the third quarter this year, rising 20.5 per cent. Nevertheless, its new high may be little more than symbolic. Continue reading »
As the FT reports, the US has suspended part of its aid to Egypt in an effort to put pressure on the military to move towards democracy. It comes after months of uncertainty from the US over how to react to the ousting/coup of president Mohamed Morsi. As they say, money talks.
But the move is largely symbolic – the sums involved barely equate to 2 per cent of the $14bn in funding the country has secured from Gulf countries since Morsi was removed. What is really hurting Egypt more is the drop in tourism. The fall in visitors just from the Americas over the last two years has hurt more than the State Department action. Continue reading »
By Elizabeth Stephens of JLT Specialty
Investor confidence and the prospects for international businesses operating in Egypt have reached an all time low as the potential for disintegration has become clear. Aid from neighbouring states has helped but it is uncertain and will not address longer term problems. Continue reading »
By Dalibor Rohac of the Cato Institute
In Egypt, violent Islam is on the rise. This week, two bomb blasts in Sinai killed six military officers. Last week, the convoy of the interior minister was hit by a bomb attack in Cairo. Besides political violence by fringe Islamist groups, Egyptians are bracing for more repression from the government. Two and half years since the Arab Spring, Egypt’s ‘deep state’ is back in full form, arresting the opposition and cracking down on independent media.
Although many competing accounts exist of why Egypt’s transition has failed – ranging from the country’s religious divisions to its authoritarian legacies – one should not underestimate the power of the simplest one. What if it’s all about the economy? Continue reading »