Egypt Economic Forecast

The Egyptian economy is undergoing a period of transition as unrest led to the overthrowing of former President Mubarak. However, the regime established by Gamal Abdul Nasser centered around the military which is now in power will manage the transition to a democratic country.

While the military not only has political control, it also has significant economic power. Military-owned companies benefit from monopolies in industries, such as hospitality and construction.

The Egyptian economy is undergoing a period of transition as unrest led to the overthrowing of former President Mubarak. However, the regime established by Gamal Abdul Nasser centered around the military which is now in power will manage the transition to a democratic country.

While the military not only has political control, it also has significant economic power. Military-owned companies benefit from monopolies in industries, such as hospitality and construction.

Whether the future will bring modernisation to the country as the military loosens its grip and facilitiates a modernisation of the economy – similar to the case in Turkey and Indonesia – or if there’ll be a democratice veneer added to a new military strongman, it’s too early to tell.

Most would hope for a positive outcome; the birth of a modern economy that benefits the Egyptian population, rich in employment opportunities and booming economy. If that would be the case, the long term outlook for Egypt is set to improve after a bumpy few years.

Egypt GDP Forecast

Egypt’s GDP stood at US$498.176 billion in 2010, making it the 26th largest economy in the world. Many Egyptians feel that the economy has been mismanaged and is stagnating. They also believe Egypt has the right to be included in the G20.

This has been a strong impetus for the 2011 uprising. In the short term however, it’s likely that economic growth will slow down due to a drop in tourism receipts, supply chain disruptions and other knock-on effects of the recent uprising and crisis situation in Egypt.

Egypt’s GDP had been forecasted, pre-crisis, to grow 6.9 percent in 2011 to US$532.57 billion, and ultimately to US$717.885 billion in 2015.

However short term disruption to Egypt’s economy is likely to knock a few percentage points off economic growth this year.

Egypt Unemployment Forecast

Egypt’s economy is considered to be underdeveloped. It’s population in 2010 was 78.238 million with a population growth rate of 2 percent per year. 40 percent of Egypt’s population is aged 20 or under.

Many jobs need to be created every year to keep unemployment at current levels, let alone bring it down.

The IMF estimates Egypt’s unemployment rate at 9.2 percent in 2010. Prior to the crisis, unemployment figures were expected to decrease to 9 percent in 2011 and 8.2 percent by 2015. With the recent events it’s likely unemployment in Egypt will worsen in the short term, but return to its current trajectory in the long term – if the economy starts opening up.

Egypt Inflation Rate Forecast

Most Egyptians are relatively poor, and they’ve been getting poorer due to rampant inflation.

Egypt’s average inflation rate has been in the double digits since 2007, spiking in 2010 at over 10 percent. The figure was forecast to drop to 11 percent and to continue to slide down into single digits by 2015 to 6.5 percent.

However, as petrol and food prices continue to rise, and supply chain being disrupted round the Arab world, high inflation rates in Egypt are likely to remain an issue for the next few years.

Egypt Current Account Balance Forecast

Egypt’s current account balance at the end of 2010 was a deficit of -US$4.318 billion.

Prior to the recent uprising, Egypt’s current account balance was forecast to drop to -US$3.841 billion by 2011 and decrease futher to -US$1.975 billion by 2015.

However, external rises in food prices, most of which Egypt imports means this figure is also likely to worsen before it gets better in the short term.