By Max Wrey, Alaco
Since taking office in mid-2014, President Abdel Fattah el-Sisi has pursued the twin goals of maintaining social order and breathing life into the country’s sclerotic economy. He has been relatively successful with the former but has struggled with the latter. In desperate need of economic stimulus, he is now courting the International Monetary Fund (IMF), the nemesis of Egypt’s presidents-of-old. That may provide much-needed fiscal stability, but can he introduce Fund-mandated reforms without fuelling social tensions?
In the years following the 2011 Arab Spring, Egypt has found itself in real economic hot water. However, not all of the problems are of its making. Last year’s terrorist outrage in the Sinai crippled the country’s vital tourism industry. Regional trade is languishing as political instability reaches unprecedented levels. Read more
Egypt is making a big push to restore its economic relations with other African nations, in trade and investment. This follows a long period of neglect. As recently as 2015, bilateral trade with the rest of the continent made up only 3 per cent of Egypt’s total. It is now beginning to rise.
As a demonstration of Egypt’s renewed commitment to Africa, it welcomed senior political and business figures from across the continent, including 10 presidents, to the Africa 2016 Forum in Sharm-el-Sheikh on February 20 and 21. The level of participation also reflects the momentum of the pan-African drive towards regional economic integration. Read more
The tragic crash of Metrojet Flight 9268 in Sinai, killing 224 people, looks increasingly to be the result of foul play by Isis. This has troubling implications for Egypt and the broader region and highlights key structural shifts in the “War on Terror”.
In a previous column for beyondbrics we highlighted our fears that Egypt was on a road disturbingly similar to that of Algeria in the 1990s, when hundreds of thousands died in a civil war. We identified the Egyptian tourism sector, which makes up over 11 per cent of GDP, as a prime target for Isis. Read more
The IMF has endorsed Egypt’s economic reforms at the conclusion of an Article IV mission, giving Cairo a much-needed boost as it prepares to host a major investment conference in March aimed at attracting billions of dollars into large projects in a range of sectors.
“Policies implemented so far, along with a return of confidence, are starting to produce a turnaround in economic activity and investment,” said Chris Jarvis, who led the IMF mission. “We now project that growth will reach 3.8 per cent in [the financial year] 2014/2015.” Read more
Stability and bold new reforms after a period of political and economic turmoil will yield Egypt GDP growth of 3.5 per cent in the year to 2015 and 5 to 6 per cent thereafter, according to Renaissance Capital.
Last week, Egypt posted GDP growth of 2.2 per cent for the year to June 2014. That is inadequate for a country with high unemployment and a youthful population. But the GDP figures also hinted at substance behind the hope that has surged through Egypt since President Fattah al-Sisi came to power earlier this year: in the three months to June, GDP rose 3.7 per cent. Read more
After 100 days in power, Egypt’s president Abdel Fattah al-Sisi has been given a cautious thumbs up by economists.
Al-Sisi, a former defence minister, won a landslide victory in Egypt’s presidential race on May 24, almost a year after he led the coup that ousted Mohammed Morsi, the elected Islamist president, from power. Political turbulence has been bruising for Egypt’s economy, which by most measures is in a worse state than it was before the advent of the Arab Spring in 2011. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more
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. Read more