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Commercial Department: Beyond Our Borders: July 2018


Beyond Our Borders

Steeped in ancient history, Egypt — the third largest economy in the Arab world — nonetheless faces a host of modern challenges, including high inflation and high unemployment. But the country also holds the potential for enormous growth in the coming years.

In 2016, Egypt devalued its currency as a condition for receiving a $12 billion loan from the International Monetary Fund (IMF). Additionally, the country’s central bank hiked interest rates by 300 basis points to curtail inflation. Although the moves were expected to cause short-term economic turmoil, they were deemed necessary for long-term growth.

That growth may be coming to fruition. Egypt is on the cusp of becoming one of the world’s fastest-growing economies, behind only Uganda and India, according to a report from Harvard University’s Center for International Development. The country’s annual gross domestic product (GDP) growth rate could reach 6.63 percent by 2026, the report states.

Egypt has long been plagued by a high inflation rate, but in April 2018, inflation dropped to 13.1 percent — its lowest level since May 2016. That was down from 14.4 percent this past February, Bloomberg News reported. The International Monetary Fund expects inflation to decline to single digits by 2019. Egypt’s GDP expanded by 5 percent in 2017, the country’s highest growth rate since 2010, according to Trading Economics.

In May, Egypt’s finance minister announced a plan to reduce the country’s deficit from around 108 percent of GDP in 2017 to 80 percent by 2020. The plan also calls for increasing the average per-capita income as part of an effort to improve overall living standards.

Real estate investment in Egypt has flourished, as real estate is seen as more stable than alternative investments and has proven resilient in the face of changing monetary policy, according to a report from real estate research company JLL. Developers have faced higher construction costs, however, because of the increased cost of imported materials and additional taxes, JLL states.

Egypt’s economic reform program has played a critical role in stabilizing the economy, according to the IMF, which says Egypt’s economic outlook is favorable, as long as the country maintains its “prudent macroeconomic policies” and expands pro-growth reforms. The IMF says Egypt also must implement policies strengthening the private sector to solidify its recent gains and promote job growth.

Unemployment remains one of Egypt’s biggest problems, although the situation is improving. The country’s unemployment rate dropped to 11.3 percent in fourth-quarter 2017, down from 11.9 percent in the prior quarter and well below the all-time high of 13.4 percent in third-quarter 2013, Trading Economics data show. But the country’s working-age population is expected to expand 20 percent by 2028, which will put its labor force at 80 million people, making job growth a top priority. 


Steven Wyble is the former online content editor of Scotsman Guide Media. For questions about this article, call (800) 297-6061 or

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