Egypt: The Inevitable Consequences of Inconsistent Socio-Economic Policies

Despite the substantial improvement of the Egyptian economic performance following the implementation of some major structural reforms in 2016 (see Fig. 7.1), Egypt’s economy continues to confront major challenges even prior to the onset of the coronavirus pandemic: By the fiscal year (FY) 2018/19, Egypt’s debt-to-GDP ratio was as high as 90.2 percent; 1 the fiscal deficit amounted to 8.2 percent of the GDP; 2 the inflation rate, although somewhat decreased, amounted to 14.4 percent (see Fig. 7.2); and the unemployment continued to be in double digit figures. In fact, the unemployment rate among the young age group (15 24) and women amounted to as high as 26 percent and 38 percent, respectively. 3 Egypt’s non-energy exports remained comprised of a small number of low-added-value products. Even the huge devaluation of the Egyptian pound (LE) in recent years has not lead to a sharp increase in manufactured and high-tech exports. In the FY2019/20, Egypt’s total non-oil and gas exports amounted to a mere 16.9 billion, 4 while hightech products represent less than 1 percent of Egypt’s total exports. 5 During the 2011 2019 period, Egypt’s per capita GDP increased by a mere 14.2 percent in real terms (see Fig. 7.1). Overall, in 2019, Egypt was ranked 116th among 188 countries listed in the HDI (Human Development Index), 6 declining from the 112 rank in 2012. 7 The only sector that markedly grew in recent years was the tourism industry.