The Economic Situation in Egypt in the Context of Political instability and a Risky Transition

Abstract

Despite the political uncertainty, Egypt’s economy maintained a growth of 1.8 points in 2012 as compared to 1.7 points in 2011. Activities increased in most of the sectors, though exports shrunk by 0.5 points. Domestic demand was the driving engine of growth as it contributed 5.1 points. Final consumption contributed 3.9% points out of which household consumption alone represents 3.6 points. Gross fixed investment (GFI) added 0.1 point, while GCF contributed 1.2 points. However, external demand contracted this growth by 3.3 points with 2.8 points due to an increase in imports. Given the weak global demand that negatively affects Egypt’s exports and Suez Canal revenue, challenges facing policy makers include mobilizing resources from both concessional loans and from promoting the PPP model to uplift private investment as projected, and implementing a development plan that focuses on both social justice and economic growth.