Egypt Economy

March 29, 2010Egyptby EconomyWatch Content

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 Located at a strategic trade location, Egypt is both a major North African economic power and the cultural leader of the Arab world.

This transcontinental country is bordered by the Gaza Strip, Israel, Sudan and Libya. The country has a diverse terrain, with a long coastline across the Red Sea and the Mediterranean Sea. A large portion of the Sahara Desert falls within the borders of Egypt. Egypt is the 30th largest country in the world.

One of the earliest cradles of human civilization, Ancient Egyptian civilisation dates back three thousand years before Christ, culminating in the Great Pyramids and Pharaohs. The country has a population of over 78 million (2010 estimates).

A majority of the population resides along the highly fertile Nile basin. The Nile River is also central to Egypt’s economy, as a majority of the trade activities take place along this basin.

Until the late 1990s, Egypt’s economy was highly centralized due to the economic policies of the former Presidents Gamal Abdel Nasser and Anwar Sadaat. However, during 2004-08, the country saw major economic reforms targeted towards attracting foreign direct investment.

The global recession in 2008 - 2009 forced economic reforms to take a backseat.

The economy remains relatively closed, with the dominant force in the country, the military, dominating many industries. Army-owned companies hold monopolies in sectors as diverse water, olive oil, cement, construction, hotels, and the all important oil industry. The remaining industries tend to be controlled by cronies of the former government, with all the corruption that goes with that

This led to a lack of opportunities for a growing population, particularly young and often well educated Egyptians. When that unemployment and stagnation is combined with inflation, you get a combustible situation.

This economic backdrop was one of the key factors in the Egyptian uprising of 2011, and has led to the ouster of former President Hosni Mubarak, the promise of democratic elections - and a lot of economic uncertainty.

Egypt Economy: GDP

In 2010, Egyptian GDP (on a Purchasing Power Parity basis) was $498.1 billion. This makes Egypt the 26th biggest economy in the world, just outside the G20. IMF's pre-crisis forecasts were for the economy to grow to US$532.568 billion in 2011, but the uprising has put a short-term dent in tourism receipts, industrial production and capital availability, so this figure is likely to drop.

GDP grew 5.259% in 2010, above the 4.674% of 2009 but below the 6.39% average growth achieved in 2005 - 2008.

Thanks to centralisation and endemic corruption, Egypt is a poor country. GDP Per Capita is US$6,367.43, making Egypt 103rd in personal income rankings.

It is estimated that 40 million Egyptians or 51% of the population lives below the poverty line of $2 a day. The official unemployment rate is 9.2%, but the real figure, including under unemployment, is quite possibly 2-3 times that.

 

Egypt Economy: Trade Relations

Egypt’s economy is largely dependent on petrochemical exports to European nations. The country has healthy trade relations with African nations, the Middle East countries and EU members. Egypt is a member of the Arab League and the WTO. It has significant bilateral relations with several EU nations, and relies on the US as it key security ally, and since the 1979 peace treaty with Israel, it has been able to focus on economic growth, however uneven that growth has been.

Egypt Economy: Major Statistics

Here are some key statistics about the Egyptian economy in 2010:

GDP: $498.1 billion

GDP Growth: 5.259%

GDP Per Capita: US$ 6,367.43

Population: 78.238 million

Population Growth: 2%

Labor Force: 25.8 million

Unemployment Rate: 9.2%

Inflation Rate: 11.703%

Current Account Balance: -US$4.318 million

Gross Government Debt (% of GDP): 74.216 %