Interim Report Egypt-F8

GROUP F8, INTERIM REPORT-1: EGYPT
1.Introduction:- Egypt, officially called the Arab Republic of Egypt, has a long history of rich
civilization and development along the Nile River. The modern Egypt is a transcontinental country
spanning the north east region of Africa and southwest of Asia connected by a land bridge. Egypt has a
population of 93 million with a annual growth rate of 2.1% It is one of the most prominent member of
the Middle East and North Africa region and has one of the largest economies in the Middle East.
Key Features:- Egypts economy has witnessed substantial FDI inflows

due to positive developments in its investment laws (finished
78 articles of Investment law) to bring in more foreign capital
in tourism and industrial sectors.
The country is strategically positioned between the Middle
East and the African market, this scenario catalyzes trade
setups with different stakeholders in the region.
The government has initiated several
consolidation reforms based on the Egypts Five
Year plan (2014/15-2018/19) featuring several
structural changes in the economy.
The Government spent $ 8.2 Billion to expand
the capacity of the Suez Canal, and the project is
expected to double the capacity and and increase
annual profits to $ 13.23 Billion by 2023.
The World Bank and IMF has approved loan
of approximately $ 3 Billion and $12 Billion
respectively to Egypt.
2.Annual Growth Rate of GDP

Egypt is regarded as one of the most diversified economies in the Middle East. As a result of various
economic reforms, the annual growth rate of Egypt was recorded at an average 5% until 2010 (averaged
4.05 percent from 1992 until 2016). A major reason for the same is foreign investments. The positive
trend of the growth rate resulted in improving living conditions of a major chunk of Egyptian population,
yet till date there exist large income disparities. The year of 2011 observed an uncertain political and
institutional environment putting an end to President Hosni Mubarak regime. The resultant economic
slowdown effected several industries such as manufacturing, tourism and construction. The following bar
chart illustrates GDP growth rate of Egypt since Jan 2014. The GDP growth also slowed down due to
various economic reforms and global turbulences such as attacks in O&G pipelines , decrease in oil
prices, trade conflicts with Qatar etc.
The GDP growth rate for the

year 2015-2016 has been
pegged at 3.4%.The GDP
growth curve is decreased
from 4.5% in the last year. A
major reason is the reduced
purchase power of citizens
due to very high inflation.
References: a) https://en.wikipedia.org/wiki/Egypt
b) www.ecs.org.eg
c) http://www.cbe.org.eg/en/EconomicResearch/Publications/AnnualReportDL/Annual%20Report2014-2015.pdf
d) http://data.worldbank.org/country/egypt-arab-rep
SECTORWISE CONTRIBUTION GDP (2016)
11.30% AGRICULTURE
INDUSTRY
SERVICES
52.90%
35.80%
The industry witnessed change in economic

reforms which impacted short term growths but might induce improvements in the long term.The
Government tried to faciliate private investments and increased FDI inflow to $6.9 Billion. Construction,
Manufacturing, Tourism and Mining Industry benefited from the government reforms and contributed
significantly to the GDP growth.The GDP growth was severely dampened by huge reduction in public
consumption. The communication sector was a significant contributer in the year with almost 20%.
CONSUMPTION AS A PERCENTAGE OF GDP
Total or final consumption is the sum of private

household consumption and general
government consumption. The average value
for Egypt during that period was 71.15 percent
with a minimum of 58.51 percent in 1976 and
a maximum of 94.07 % in 2015 (82.71 percent
in 2014) (Source: World Bank Data |
globaleconomy.com). The public consumption
witnessed a major fall after President Sesis
government changed its subsidy policies in the
energy sector to reduce the subsidy expenditure
by 22% which resulted in annual savings of
approximately $6 Billion.
EGYPT HISTORICAL INFLATION RATE
b) www.ecs.org.eg
The painful economic reforms have hit the

inflation rate in Egypt to great extents. The
inflation for 2016 has reached up-to 30%,
increasing the prices of some goods such as
prices of meet jumped more than 100%.This
has severe implications on the public savings.
The loss of subsidies in fuels and increasing
inflation has caused damage to the prominent
low middle income class in Egypt. The
adjustments in salaries of labour have not been
in line with the inflation resulting in a
detrimental effect on the standard of living of
several population groups.
GDP THE EXPENDITURE APPROACH:- In expenditure approach ,the GDP is broken down into
components such as Private Consumption, Government Consumption, Real Investments and net exports
to figure out which components is majorly contributing to the GDP growth. The expenditure approach
takes into consideration the trade balance and the consumption of goods and services in the current
fiscal.It is given by :- Y = GDP = C + I + G + NX
EGYPT- LABOR AND HUMAN CAPITAL:- Since President Sisis arrival,the unemployment rate has
dipped a little bit to 12.5% but the fundamental problem is that the educated youths of Egypt continues to
remain unemployed.The higher inflation rate has resulted in closure of several local establishments such
as restaurants, retail stores etc. and this has limited the job opportunities available for the Egyptian
youth.A labor survey by the Internatinal labour organisation actually highlighted that the unemployment
levels in Egypt actually increases with greater attainment of education (34% for university graduates as
compared to 2.4% for youth with less than primary education).The high unemployment rate can also be
attributed to the population growth and significant demographic pressures.Although agriculture continues
to be a lead employer in Egypt, the private sector has been unable to create vocational jobs to sustain the
labour market.
b) www.ecs.org.eg
EGYPT : AGGREGATE PRODUCTION: The aggregate production formula details the relationship
between the output growth with respect to the input changes in productivity, physical capital, human
capital and labour. The Cobb-Douglas Aggregate production function is given by : Y = Y =A K0.3 L0.7
The domestic and external debt for

Egypt has been in a upward
trajectory and the major reason for
this development has been its
inability to have a sustainable and
serviceable domestic market. The
domestic demand has been
dampened by political turmoil in
2014 and a series of economic
reforms.
b) www.ecs.org.eg
The balance of trade for Egypt

stands at -$2 Billion which has created
a severe budget deficit.The increasing
inflow of FDI in canal works, tourism
and worker remittances has been able
to offset the damages due to high
inflation and low growth in the labor
market. Egypt needs to increase in
domestic production and consumption
to increase its government revenues
while addressing reforms to boost
trade and tourism.The Government is
also working on new VAT law to
develop other revenue channels.
The net national per capita income of
Egypt has been in a upward trend, this
can be attributed to a stable government
and reduction in altruistic measures by
the government. But the 2.4 % growth
rate still lower than the rates in the
previous decade. The increasing GNI
per capita also reflects improvement in
quality of life ,life expectancy while the
easing restriction on foreign exchanges
and increase in foreign aid have
contributed to greater production for
Egypt in the year 2016.
b) www.ecs.org.eg

Interim Report Egypt-F8

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Interim Report Egypt-F8

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GROUP F8, INTERIM REPORT-1: EGYPT

Key Features:- Egypts economy has witnessed substantial FDI inflows

2.Annual Growth Rate of GDP

The GDP growth rate for the

SECTORWISE CONTRIBUTION GDP (2016)

The industry witnessed change in economic

CONSUMPTION AS A PERCENTAGE OF GDP

Total or final consumption is the sum of private

The painful economic reforms have hit the

The domestic and external debt for

The balance of trade for Egypt

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