Economic trends
The Egyptian economy has shown resilience to the global financial crisis and a 6% growth was expected for 2011. However, because of the political crisis and revolutionary upheaval, growth evetually reached only 1.2% in 2011.
Since the political crisis that led to the downfall of the regime of Hosni Mubarak, Egypt has entered a period of uncertainty and the future direction of economic policy is unclear. Stabilizing the economy remains a priority. The budget deficit (11% of GDP) worsened as a result of declining tax revenues, rising food prices and oil prices (subsidized) and the weight of debt service, as well as the deficit of the balance of payments. The 2011-2012 budget, voted in June 2011, reflects an expansionary policy and provides measures to reduce social inequalities. At the cost of drastic cuts in the country's foreign exchange reserves, the Supreme Council of the armed forces who temporarily governs the country decided on a wage increase for civil servants, setting a minimum income in the private sector and maintaing energy subsidies. The economic and political situation has lead the rating agency Standard & Poor's to lower Egypt's rating. Despite strong opposition, the country could negotiate a loan agreement with the IMF.
The social situation is worrying. The official unemployment rate is close to 12%, 75% of all employees work in black and 18% of the population lives below the poverty line.
Main branches of industry
Agriculture contributes around 13% of the GDP and employs about a third of the active population. The warm climate and the abundant Nile water allows for several annual harvests. The main crops are cereals, cotton, sugar cane and beets.
Egypts remains a country with little industry. With its diverse natural reserves (gold, minerals, iron, oil and gas), oil and gas-related activities and the secondary sector account for just over a third of the GDP. Egypt is the world’s sixth largest exporter of natural gas.
Finally, the tertiary sector represents around 50 % of the Egyptian GDP. It is largely dominated by revenues from telecommunications (which grew by 11% during the first quarter of 2010) and from tourism (the tourist industry brings about 11b in annual revenues. For example Cairo received 14m of visitors in 2010).
In spite of its economy’s diversification, the country still depends for a large part of its income on the Suez Canal.
International trade
Trade represents over 55% of the country's GDP (average for 2008-2010). The Egyptian market is gradually opening up, especially after signing an agreement with the European Free Trade Association (EFTA) in 2006, and promoting a free trade treaty with the United States. Its three primary export partners are the European Union, which represents more than a third of the trade, United States and Syria. The EU and the USA absorb almost 60% of egyptian exports. Egypt mainly exports mineral fuels and oil, cotton, iron and steel. It imports mainly consumer electronic goods and capital goods, nuclear reactors and nuclear-powered boilers, cereals, food products and chemical products. The Egyptian trade balance is structurally in deficit, which further worsened in 2011 due to collapse of trading during the revolution; however, since then imports have resumed growth.
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Last updates: May 2012
