Egypt is attempting to transition its government from an authoritarian system to a democratic one. The country is moving forward with a road map that aims to utilize the objectives of the 2011 uprising, but high unemployment, high prices, and a large population of young graduates looking for jobs will continue to present challenges. From June 25th, 2011 until June 30th, 2013, Egypt’s economy slowed almost to a standstill.
While life in major urban centers has been mostly stable, multiple suicide attacks targeting police and governmental facilities have occurred throughout the country, as well as assassination attacks on government officials. The emergence of so-called Islamic State (IS) and its frequent attacks in North Sinai have cast dark clouds on the tourism industry, which contributed roughly 15% to the national GDP in 2015.
Political instability has plagued the nation, stagnating growth and driving away foreign investors. Foreign direct investment has declined from 6.8 billion dollars in 2010 to 2.2 billion dollars in 2012. Massive demonstrations took almost one-third of the population to the streets again on June 30th, 2013, and led to the new regime’s ouster. A caretaker government has taken over since then. Its plan includes introducing several reforms such as anti-trust, conflict of interest and land procurement legislations. Projections for 2014 are fairly optimistic and many believe that Egypt is back on the right track, while acknowledging the multiple challenges ahead.
The World Bank estimated Egypt’s population to be just under 90 million in 2014, while the population growth rate was estimated to be roughly 2.2 percent. With a GDP of 286.5 billion dollars, Egypt’s GDP per capita was roughly 3,200 dollars in 2014. With the GDP growth rate keeping pace with the population growth, Egypt’s per capita GDP is expected to have remained roughly constant. The inflation rate was reported to be slightly over 10 percent.
While the economy was facing serious challenges upon the departure of Mr. Morsi, several Arab states provided assistance to the then-new Egyptian government. Ever since President El Sisi assumed power, the construction of several major infrastructure projects has been underway. In August 2015, the Suez Canal was expanded to provide quicker marine travel in both directions. This project also represents the initial phase in a multi-billion Dollar development project encompassing transforming the Suez Canal area into a series of industrial and trade and shipment services zones that could provide jobs for hundreds of thousands of Egyptians. A new Administrative Capital was also announced to be constructed, and after negotiations reached a dead end with the initial Emirati developer that was to undertake the project, discussions are currently underway with Chinese developers and construction works are planned to commence shortly. In addition, the Egyptian government is in advanced discussions with the IMF for a 12 billion dollars loan. The IMF loan is likely to be followed by loans from the World Bank and the African Development Bank. These loans will provide a good opportunity for the Egyptian government to turn around the economy. The Egyptian government has recognized the need for quick implementation of economic reforms.