Egypt, a lower middle income country, is due to complete its political transition: a new constitution was adopted by popular referendum and presidential elections were held in May 2014. Parliamentary elections were completed in December 2015.
GNI per capita is estimated to be around $3,340 in 2014/15. Official data indicate that 28 percent of the population lived below the poverty line in 2015, with poverty rates as high as 60 percent in rural Upper Egypt. There have been significant improvements in human development indicators over the last three decades. Nevertheless, large spatial disparities exist in terms of education and health outcomes.
Unemployment at 12.5 percent in mid-2016 (up from 9 percent prior to 2011) is a particular concern, with higher rates among the youth and women. Furthermore, recent increases in the population growth rate, is placing additional pressure on infrastructure and services. This is creating additional impetus for reforms to generate economic growth and to respond to the needs of the population and their expectations of improvements in well-being.
The economy is gradually improving with annual rates of GDP growth reaching 4 percent in 2014/15 and 2015/16, up from an average of only 2 percent during the period 2010/11-2013/14. Responding to large fiscal imbalances, the government has introduced a bold fiscal consolidation program. The program includes measures to increase tax revenues, control the civil servants’ wage bill, shift spending from commodity subsidies to targeted cash transfer programs as well as undertake much needed infrastructure investments.
However, macro imbalances persist. Despite efforts to correct exchange rate misalignments, there is still a parallel exchange rate (which emerged in 2013). International reserves are low. In addition to the foreign exchange crunch, Egypt’s investment climate and unfavorable external conditions—such as the sluggish economic recovery in Europe, and lower international oil prices that have impacted Egyptians remittances from the Gulf—add to the economic challenges.
Last Updated: Oct 01, 2016