ECONOMY OF EGYPTECONOMY OF EGYPTBY

MAHMOUD MOSTAFAMAHMOUD MOSTAFA

ECONOMY OF EGYPTECONOMY OF EGYPTBY

MAHMOUD MOSTAFAMAHMOUD MOSTAFA

OUTLINEOUTLINE

Introduction Macroeconomic trend Natural resources Investment Labor force and employment Poverty and income distribution Statistics References

• Introduction:Introduction: Occupying the

northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. In the last 30 years.

During the 1990s, a series of International Monetary Fund arrangements, coupled with massive external debt relief resulting from Egypt's participation in the Gulf War coalition, helped Egypt improve its macroeconomic performance.

The pace of structural reforms, including fiscal, monetary policies, privatization and new business legislations, helped Egypt to move towards a more market-oriented economy and, since the turn of the new millennium, prompted increased foreign investment.

Macroeconomic trend.Macroeconomic trend.

Egypt has a stable economy in the Middle East and North Africa enjoying continuous growth, averaging 4%–5% in the past quarter-a-century. The economy embarked on various stages of development during which the public and private sectors played roles varying in relative importance.

Import substitution and nationalization, 1952–1966, during which the first program of industrialization in 1957 was established and led by the public sector in heavy industries such as iron and steel and chemical industries, and the nationalization which receded the relative importance of the private sector.

Inter-war, 1967–1973, adversely affected the performance of the economy and public sector role in import substitution.

Openness euphoria, 1974–1981 during which policies were introduced to encourage Arab and foreign investment through a series of incentives and liberalizing trade and payment; the economy expanded but this proved unsustainable and growth consequently scaled back.

External debt crisis, 1982–1990, the external debt crisis and Paris Club re-scheduling and debt reduction.

Economic reform, 1991–2007, reform policies were introduced under the terms of international institutions, lenders and donors, including wider incentives to the role of the private sector in all economic activities.

The World Food Crisis, 2008–present, soaring food prices, especially for grains, calls for the government to provide more immediate assistance to the population of more than 40% in the "poverty tunnel" and to strike a "new deal" on agriculture policy and reform.

Natural resources.Natural resources.

Land, agriculture and crops.

Warm weather and plentiful water permit several crops a year. Land is worked intensively and yields are high. Cotton, rice, wheat, corn, sugarcane, sugar beets, onions, and beans are the principal crops. Increasingly, a few modern techniques are applied to producing fruits, vegetables and flowers, in addition to cotton, for export.

The Western Desert accounts for about two-thirds of the country's land area. For the most part, it is a massive sandy plateau marked by seven major depressions. One of these, Fayoum, was connected about 3,600 years ago to the Nile by canals. Today, it is an important irrigated agricultural area.

Practically all Egyptian agriculture takes place in some 25,000 km² (6 million acres) of fertile soil in the Nile Valley and Delta.

Some desert lands are being developed for

agriculture, including the controversial but ambitious Toshka project in Upper Egypt, but some other fertile lands in the Nile Valley and Delta are being lost to urbanization and erosion. Larger modern farms are becoming more important in the desert.

Water resources

"Egypt," wrote the Greek historian Herodotus 25 centuries ago, "is the gift of the Nile." The land's seemingly inexhaustible resources of water and soil carried by this mighty river created in the Nile Valley and Delta the world's most extensive oasis. Without the Nile, Egypt would be little more than a desert wasteland.

Before the construction of dams on the Nile, particularly the Aswan High Dam (started in 1960, completed in 1970), the fertility of the Nile Valley was sustained by the water flow and the silt deposited by the annual flood. Sediment is now obstructed by the Aswan High Dam and retained in Lake Nasser.

The interruption of yearly, natural fertilization and the increasing salinity of the soil has been a manageable problem resulting from the dam.

The benefits remain impressive: more intensive farming on thousands of square kilometers of land made possible by improved irrigation, prevention of flood damage, and the generation of millions of gigajoules of electricity at low cost.

Mineral and Energy Resources

Egypt's mineral and energy resources include petroleum, natural gas, phosphates, gold and iron. Crude oil is found primarily in the Gulf of Suez and in the Western Desert. Natural gas is found mainly in the Nile Delta, the Mediterranean Sea, and the Western Desert. Oil and gas accounted for approximately 7% of GDP. Export of petroleum and related products amounted to $2.6 billion

Other Resources:Other Resources:Suez Canal

The Suez Canal opened in 1869, it allows water transportation between Europe and Asia without navigating around Africa or carrying goods overland between the Mediterranean and the Red Sea.

The canal is 192 km (119 mi) long. It is single-lane with 4 passing places north and south of the Great Bitter Lake, and links the Mediterranean Sea to the Gulf of Suez on the

Red Sea.

The Income of Suez Canal:

a Suez Canal authority official said income from canal transit fees rose 16 percent in 2004 to reach a record $3.2 billion. Suez Canal income for 2004 stood at $3.2 billion, up from 2.8 billion the previous year, the official said, adding that a total of 17,224 ships carrying 646 million tons of goods had crossed the Suez.

Tourism:

Tourism is currently representing 11.3% of Egypt's GDP, and 19.3% of Egypt's foreign currency.

Because of the significant role of tourism in the national economy, the Ministry of Tourism has developed a plan to increase the capacity of the Egyptian tourism to become globally competitive, increase its share in pushing forward the national economy and attract more tourists to the Egyptian market.

Investment climateInvestment climate

The Egyptian equity market is one of the most developed in the region with more than 633 listed companies. Market capitalization on the exchange doubled in 2005 from USD 47.2 billion to USD 93.5 billion.

The major industries include textiles, hydrocarbon and chemical production, and generic pharmaceutical production.

Labor force and employment.Labor force and employment.

Egypt has a population of about 75 million, with the population concentrated to a region within 20 miles (32 km) on either side of the Nile River. The majority of the population is employed in the services sector, followed by agriculture and industrial production.

Approximately one-third of Egyptian labor is engaged directly in farming, and many others work in the processing or trading of agricultural products.

Unemployment rate increased from 10.3% in 2004 to 11.2% in 2005. The average rate of growth of employment in the publicly-owned enterprises sector was -2% per year between 1998 and 2005 as a result of aggressive privatization program.

On the other hand, private sector employment grew at an average rate of 3% over that period. In addition, the government sector employment grew by almost double the rate of the private sector over the same period.

Poverty and income distribution.Poverty and income distribution.

Data from a World Bank and Ministry of Economic Development poverty assessment based on comparisons between actual expenditures (and the cost of a consumption basket securing 2470 calories per day per person), shows that individual Egyptians who spent less than EGP 995 per year in 2005 are considered extreme poor, those who spent less than EGP 1423 per year are poor and those who spent less than EGP 1853 per year are near poor.

Overall about 40.5% of the Egyptian population are in the range of extreme poor to near poor:

19.6% of the Egyptian population was poor, meaning that about 13.6 million Egyptians (one out of every five) had consumption expenditure below the poverty line and could not therefore obtain their basic food and non-food needs.

3.8% of the Egyptian population was extreme poor, meaning that about 2.6 million of the Egyptian poor could not obtain their basic food requirements even if they spent all their expenditure on food.

21% of the Egyptian population was near poor, meaning that about 14.6 million Egyptians can obtain their basic food requirements in addition to some basic services.

Statistics.Statistics.

Basic Data

Fiscal Year1 July–30 June

CurrencyEgyptian pound (EGP) = 100 piasters

Land Area1 million km²

GDP (General Domestic Producer)PPP (Purchasing Power Parity)CPI (Consumer Price Index)

GDP (PPP)$405.4 billion (2007 est.)

GDP growth7.1% (2007 est.)

GDP per capita$5,000 (PPP) (2007 est.)

GDP by sectorAgriculture (13.8%), Industry (38.1%), Services (48%) (2007 est.)

Inflation (CPI)9.5% (2007 est.)

Labour force22.1 million (2007 est.)

Labour force by occupationAgriculture (32%), Industry (17%), Services (51%) (2001 est.)

Unemployment9.1% (2007 est.)

Main industriesTextiles, Food Processing, Tourism, Chemicals, Pharmaceuticals, Hydrocarbons, Construction, Cement, Metals, Light Manufactures

Exports$24.45 billion (2007 est.)

Export goodsCrude Oil and Petroleum Products, Cotton, Textiles, Metal Products, Chemicals

Main export partnersUnited States 10%, Italy 9.7%, Spain 7.8%, Saudi Arabia 5%, United Kingdom 4.3% (2007)

Imports$44.95 billion (2007 est.)

Import goodsMachinery and Equipment, Foodstuffs, Chemicals, Wood Products, Fuels

Main import partnersUnited States 11.7%, China 9.7%, Italy 6.5%, Germany 6.4%, Saudi Arabia 4.8% (2007)

References.References.

• Central Bank of Egypt. "Economic Bulletin and Annual Report Egypt 2007.

• "The Emerging Landscape of the Natural Gas in Egypt". Cairo University, manuscript.

• "From Marina to Kom-Ombo: A Note on Poverty in Egypt". Cairo University, manuscript August.

• Ministry of Investment (2005). "Quarterly report (Second Quarter) financial. pp. 21.

• http://en.wikipedia.org/wiki/Economy_of_Egypt.• http://i-cias.com/e.o/egypt_2.htm.