06 December 2022 08:17 PM

Egyptian Economy 8 in years

Wednesday، 06 April 2016 11:23 AM

The Media Center of the Council of Ministers published a report that dealt with the statement of account of the Egyptian economy during 8 years proving its strength and flexibility in facing crises, in light of the successive crises hitting the economies of the world. The report indicated:

Over the past eight years, the Egyptian state has sought a national economy that enjoys competitive and flexible potentials, contributing to enhancing growth levels in various sectors and improving investment climate, through: -
A package of comprehensive reforms, and various investment incentives.

Continuing efforts to raise the efficiency of the labor market

* Backing the sources of foreign exchange
The state adopts development plans within a participatory framework between its various sectors and development partners internally and externally, which has formed the cornerstone of the ability to withstand the current global crises and challenges that have affected the various economies of the world, especially with the strenuous efforts exerted by the state to tackle the various negative economic and social repercussions. These efforts will be reflected in the international institutions' view on the Egyptian economy and its management of the risks arising from international changes, especially at the economic level.

Growth rate
The Egyptian economy achieved the highest growth rate in 14 years despite the repercussions of the Russian-Ukrainian crisis, as the economic growth rate exceeds the global growth rate expected to reach 3.2% in 2022, to achieve 6.6% in 2021/22, compared to 2.9% in 2013/2014 .

Local production
Gross domestic product at current prices increased more than 3 times, reaching 7.9 trillion pounds (initial statement) in 2021/2022, compared to 2.2 trillion pounds in 2013/2014.

Unemployment rate
It continued to Achieving low levels of the unemployment rate and reach the lowest rate in more than 30 years, to record 7.4% in 2021, compared to 13% in 2014, while the unemployment rate recorded 7.2% in the second quarter of 2022.

Inflation rate
Containing the inflation rate within the targets of the Central Bank of Egypt is 7% (±2%) for the end of 2022, as it recorded 8.5% in 2021/2022, compared to 10.1% in 2013/2014, while the overnight deposit rates witnessed an increase in order to contain the inflation rate after the Russian-Ukrainian crisis to record 11.25% on 08/18/2022, compared to 9.25% on 17/7/2014.

Revenues and expenses
Maximizing revenues and controlling expenditures contributed to reducing the levels of the total deficit and government debt. With regard to public expenditures as a percentage of GDP, it amounted to 22.8% in 2021/22, compared to 32.9% in 2013/2014. The rationalization of expenditures has contributed to achieving a primary surplus in the general budget.
Revenues increased by nearly three times in 2021/22, compared to 2013/2014, but they decreased as a percentage of GDP for growing by a large percentage, reaching 16.7% in 2021/22, compared to 21.4% in 2013/2014.

Local production
The primary balance as a percentage of GDP witnessed the achievement of a primary surplus despite the primary deficit of the advanced economies achieving at a rate of 3.4% of GDP in 2022, as it recorded 1.3% in 2021/22, compared to recording a deficit of 3.9% in 2013/2014.
The total deficit of GDP in Egypt is less than the total deficit in emerging economies (not including the Middle East oil countries) reaching 6.6% of GDP in 2022, as it recorded 6.1% in 2021/22, compared to 12% in 2013/ 2014 .

Debt rates
Debt rates in Egypt are lower than international rates, as government debt as a percentage of GDP recorded 87.2% in 2021/2022, compared to 89.3% in 2013/2014, pointing out that the global government debt ratio of GDP in 2022 is expected to reach 94.4%, and the government debt ratio for advanced economies is expected to reach 115.5% of GDP in 2022.

Exchange rate liberalization policy

The exchange rate liberalization policy succeeded in achieving an accumulation of net international reserves, which amounted to $33.1 billion (initial statement) in July 2022, compared to $16.7 billion in July 2014, and the number of months of commodity imports covered by net international reserves reached 4.6 months (initial statement). ) in June 2022, compared to 3.3 months in June 2014.
The Egyptian pound turned from the worst performing currency in 2014 to the second best performing currency in the world against the dollar (the selling price), as the value of the Egyptian pound fell sharply, making it one of the ten worst performing currencies in the world during 2013, according to Bloomberg.
The exchange rate reached 7.18 pounds at the end of December 2014, and in September 2015, the Egyptian pound became overvalued with the depreciation of emerging market currencies - according to Bloomberg - and in the same month, the black market for the dollar returned after an 8-year hiatus - according to the Financial Times.

The exchange rate of the Egyptian pound was liberalized in November 2016, while it reached 18.38 pounds at the end of December 2016, while the Egyptian pound came in January 2020 among the best performing currencies in the world against the dollar during 2019, according to Bloomberg, and it reached 15.76 pounds at the end of December 2021.  The dollar recorded 19.26 pounds on August 31, 2022, following the Ukrainian crisis that began in February 2022.

Foreign exchange sources
Sources of foreign exchange doubled, thus enhancing Egypt's external solidity, and Egyptian exports reached their highest level in 26 years, recording $47.1 billion in (July-May) in 2021/22, compared to $25.8 billion in (July-May) in 2013/2014. In addition, remittances from workers abroad recorded $31.9 billion in 2021/22, which is the highest level ever, compared to $18.5 billion in 2013/2014.

Suez Canal revenue
Suez Canal revenues recorded their highest level ever in 2021/2022, with a value of $7 billion, compared to $5.3 billion in 2013/2014, as well as the recovery of tourism revenues after successfully managing the Corona crisis, recording $8.2 billion (initial statement). In (July-March) 2021/22, compared to $3.4 billion in (July-March) 2013/2014.

Foreign investment
Net foreign direct investment remarkably recovered despite successive crises, to record $7.3 billion (initial statement) in (July-March) 2021/2022, compared to $3.1 billion in (July-March) 2013/2014.

The performance of global currencies against the dollar

The performance of the most important global currencies declined against the dollar, including the pound, due to the Russian-Ukrainian crisis. The change has occurd since the beginning of the crisis February 25 until the end of August 2022. Among the countries whose currencies have witnessed a decline are: Qatar, Kuwait, the eurozone, the United Kingdom, the Czech Republic, Poland, Hungary and Turkey, and in the same context has The currencies of Indonesia, India, Malaysia, China, Taiwan, the Philippines, Thailand, South Korea, Japan, Australia, Peru, Chile, Colombia, South Africa, Brazil and Canada also declined, while the performance of the currencies of Russia and Mexico improved, while the currencies of the UAE, Oman, Bahrain, Saudi Arabia, and Jordan stabilized.

Egypt's foreign debt

Egypt’s external debt is among the best compared to the most prominent emerging economies in the world, and the countries were chosen according to the Morgan Stanley classification of emerging markets, where the ratio of external debt to GDP (according to the latest data available in 2022) reached 34.6% in Egypt, while Brazil recorded 18.7%, Chile 84%, Colombia 50.7%, Peru 45%, Thailand 38.7%, Hungary 61%, South Africa 38.1%, Turkey 56.8%, India 19.9%, Indonesia 31.8%, Malaysia 67.7%, and the Philippines 27.5%. , Egypt's external debt as a percentage of GDP is still in the safe range according to the classification of the International Monetary Fund.

The improvement of the international view of the Egyptian economy

The international vision of the Egyptian economy has improved during 8 years

In July 2013, "Fitch" lowered Egypt's credit rating to B- with a  future negative outlook, as the downgrade reflects the increasing negative risks to the economy, the high rate of deficit and the severe shortage of foreign exchange sources, and the instability will make it difficult to implement economic reforms, while In April 2022, Fitch affirmed Egypt's credit rating at B+ with a stable outlook, explaining that Egypt's rating is supported by its recent record of financial and economic reforms, and its large economy achieving strong growth, in addition to the support of regional and international partners.

In May 2013, Standard & Poor's lowered Egypt's credit rating at CCC + with a stable outlook, due to the deteriorating probability of the Egyptian authorities achieving their financial goals or the ability to mitigate external pressures and obligations, while Standard & Poor's affirmed in April 2022 the rating. Egypt's credit rating is at B level with a stable future outlook, noting that its outlook reflects the Egyptian state's response to crises along with the support of international partners, which will prevent any material deterioration resulting from high prices.

In March 2013, Moody's downgraded Egypt's credit rating to Caa1 with a future negative outlook. It attributed this view to the fact that the ongoing state of instability has significantly weakened the Egyptian economy, in addition to the deterioration of Egypt's position as to its external obligations.

In May 2022, Moody's affirmed Egypt's credit rating at B2 with a future negative outlook, noting that the Egyptian credit file is still supported by economic and financial reforms, strong growth and a large domestic financing base. The realization of primary budget surpluses before the Corona pandemic has also been restored and is likely to continue.

In 2013, the International Monetary Fund indicated that Egypt's economic prospects are still fraught with challenges due to the state of instability and delay in implementing reforms, and that there is an urgent need to implement a comprehensive economic program, while in 2022 it praised Egypt for taking several economic measures to confront the successive crises.

The IMF considered these measures as welcome steps effecting an expansion in social protection directed to its beneficiaries and the application of the flexibility of the exchange rate movement.

During 2013, the World Bank considered that foreign direct investment flows to Egypt were few compared to its prediction in 2022 that the proportion of foreign investments in the Egyptian GDP would increase from 2021/2222 until 2023/2024.

In 2013, the African Development Bank indicated expectations of a decline in the economic growth of Egypt in light of the state of instability, while it confirmed during 2022 that Egypt’s economic prospects are positive and its economy is expected to recover, owing to Egypt’s steadfastness in the face of the Corona crisis, and also expected the fiscal deficit to decline. It also expected that Egypt will continue to achieve a primary surplus.

In 2014, Fitch confirmed that the Egyptian economy is going through a difficult period with the persistence of concerns surrounding the devaluation of the currency and the undermining of investment patterns, while in 2022, it indicated an improvement in tourism revenues and foreign direct investment, in addition to regional and international support for Egypt allowing it to cover its external obligations.

In 2011, Egypt exited the "GBMorgan Index" for not meeting the institution's requirements, while in 2021 Egypt joined the "GBMorgan Index" of government bonds by 1.85%, and the environment and governance by 1.18%.

In 2013, the Oxford Business Group saw that Egypt is facing financial difficulties and fears that restrict financial and economic activity, in return for its assertion in 2022 that the Egyptian economy has proven its ability to withstand the Corona crisis, supported by ambitious economic reforms throughout the years preceding the crisis.

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