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EGYPT OUTLOOK 2022
ECONOMY
Social. Business. Economy.
EGYPT OVERVIEW
MACROECONOMIC
The government’s key objective is to create a productive, The disruptions caused by the
efficient, and ultimately more dynamic economy and to COVID-19 pandemic started in
ensure that future growth is high, sustainable, and Egypt in March 2020 and have
inclusive.Many ambitious projects are being planned and since interrupted a period of
executed to expand Egypt’s production frontier and macroeconomic stability,
thereby transform the country’s entire economic characterized by relatively high
landscape over the longer-term; meanwhile, pragmatic growth, improved fiscal accounts,
and focused fiscal, monetary, and regulatory policies and and a comfortable level of foreign
reforms are being formulated and implemented to reserves. The pandemic hit as
address in the short-to-medium term Egypt’s fiscal and longstanding challenges
other macroeconomic imbalances, infrastructure deficits, continued to persist, notably the
human resource challenges, poor living standards and the government’s elevated debt-to-
various bureaucratic, legal and regulatory impediments to GDP ratio (despite its significant
investment. While several elements of the reform agenda reduction in recent years),
have already been put into effect, the government sluggish revenue-mobilization,
recognizes that much more must still be done in the and a budget structure
coming years to fully restore the economy to health. unfavorable to the nature of the
crisis, with limited allocation
The government is also monitoring and evaluating the scheduled for key sectors such as
potential impact of shocks that may stem from regional health and education, limited
and global developments. Its focus on achieving fiscal job-creation in the formal sector,
consolidation and implementing the necessary structural and the below-potential
reforms will help safeguard Egypt’s economic resilience performance of non-oil
and bolster the policy capacity to respond flexibly to merchandise exports and non-oil
adverse conditions as they arise. FDI.
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BUYING AND SELLING VALUE
INCREASED THIS WEEK
It seems that conditions continued to improve,
albeit at a slower pace. In the first quarter of the
new fiscal year, the non-oil sector PMI rose during
December 2021 to record 49 points compared to
the previous month, recording 48.7 to approach
the neutral level of 50 points. In addition,
merchandise exports and imports expanded
strongly in the first 11 months of 2021 and
amounted to $29.087 billion, an annual increase of
27%, a difference of $6.2 billion over last year.
Moreover, the government has gradually eased
restrictions on the tourism sector - and the tourism
sector is expected to see a recovery in the current
fiscal year. Meanwhile, authorities recently
announced that Suez Canal transit fees will rise by
6.0% from February 2022, boosting foreign
exchange reserves.
The Egyptian economy continues to prove its ability to cohesion and positively deal with
emergency crises and recover from its effects, especially the Covid-19 pandemic, which has
negatively affected the economies of all countries of the world.
The success of implementing the economic reform program adopted by the state over the
past years is the main reason for the strong performance of the Egyptian economy and its
ability to resist the repercussions of the Covid-19.
EGYPT'S ANNUAL affirmed Egypt's credit
CREDIT REVIEW
rating at "B+" during the month of March 2021 with
a stable outlook. The report added that the
economic and financial reforms contributed to the
stability and resilience of the Egyptian economy
during the global health crisis.
Egypt is the only country in the
Middle East and Africa that has affirmed Egypt's credit
successfully concluded the annual rating in local and foreign currencies at "B" with a
credit review, and maintained the stable outlook for the fourth time in a row since the
confidence of the three global rating beginning of the epidemic. The report added that
agencies, in one of the most difficult Egypt's medium-term growth prospects are
periods we have witnessed. Egypt strong, excluding the impact of the pandemic in
maintained its sovereign and credit the near term, supported by the continued
rating with a stable outlook. In the implementation of financial and economic reforms.
same vein, many international
institutions and credit rating agencies
affirm that the strong results that the ranked Egypt at “B2” with
Egyptian economy has been able to a “negative” outlook for the third time in a row
achieve come as a result of the efforts during the epidemic. The report added that Egypt
made through the economic reform enjoys a large domestic financing base, in addition
program launched in 2016, in addition to expected foreign exchange reserves that are
to national projects in the areas of sufficient to cover external obligations due over the
infrastructure and strong growth in next three years. Egypt has demonstrated broad
the telecommunications sector. resilience in the face of shocks.
Moreover, this decision also reflects the credit rating agencies’ confidence in the Egyptian
economy’s ability to weather internal and external shocks, the availability of a strong and
diversified domestic financing base in Egypt, the high foreign exchange reserve balance, and
the government’s continued implementation of the structural economic reform agenda
aimed at improving Export competitiveness and expanding revenue base.
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SUSTAINABLE DEVELOPMENT
EGYPT VISION 2030
Egypt launched a 15-year sustainable development strategy - Egypt Vision 2030 - the noble
strategy envisions a future in which Egypt has a competitive, balanced, and diversified
economy, all with the ultimate goal of improving the quality of life for Egyptians and social
justice. Egypt’s Vision 2030 includes eight national goals that will achieve the seventeen
United Nations goals for sustainable development, on top of which is improving the quality
of life for Egyptians by eliminating poverty and hunger, improving health services, and
building sustainable cities. Egypt advanced 9 places in the sustainable development index
for 2020, as it ranked 83rd out of 166 countries, compared to 92nd place out of 162 countries
in 2019, and ranked seventh in the Arab world, recording 68.8 points in 2020, compared to a
regional average of 66.3 Point for the Middle East and North Africa.
EGYPT MEGA PROJECTS
The Egyptian government has embarked on implementing a number of
huge national projects aimed at enhancing the competitiveness of the
economy, creating job opportunities, and attracting foreign and local
investments. With the continuation of work by more than 1,000
companies and more than two million Egyptian workers. Where there
are approximately 25 giant projects under implementation, worth
more than 335 billion US dollars in all sectors, with a budget estimated at 162 billion pounds,
or about 10.34 billion US dollars, targeting 8 sectors and being implemented in 27
governorates. Economic development projects have the lion’s share of government initiatives
with economic reform as a priority since June 2014, which is intertwined with achieving social
justice. The following projects are directly related to strengthening the economy: the new
Suez Canal, the Suez Canal Economic Zone, the Sinai Development Project, and the Upper
Egypt development projects. Real estate and infrastructure projects are essential to a
booming Egyptian population and are paving the way for foreign investments, such as the
national road network, new cities, the Galala plateau project, the Golden Triangle project, and
the North West Coast Development Project and New Toshka. For research and innovation,
only one project is underway and that is the National Program for Technology Incubators.
Finally, socially. Iskan Project. Egypt has a few projects that aim to eradicate hunger, achieve
food security, and promote sustainable agriculture, such as the 1.5 million feddan reclamation
project, the East El Oweinat reclamation project, and the National Aquaculture Project, and
the logistic center for grain storage and handling.
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FLACTUATION
FINANCIAL MARKETS
The real GDP in Egypt is expected to grow at
a rate of 5.5% in the fiscal year 2021/22 and
compared to a rate of 3.6% in the fiscal year
2020/2021, compared to the growth of 5.6%
recorded in the fiscal year 2018/2019, and this
decline is driven by the negative impact of
the Coronavirus On economic activity locally
and externally, these rates are still fairly large
when compared to its regional counterpart,
as Egypt avoided applying a complete
closure for 24 hours, and the negative
impact of the virus will be divided between
the fiscal years 2019/20 and 2020/21.
The annual core inflation rate rose to 15.6% last July, compared to 14.6% in June 2022. It is the
highest level in 4 and a half years, which may continue to increase until the end of the year,
and compared to last year 2021, it reached 4.8%.
Considering the central bank’s
target inflation rate of 7% (with a
deviation of 2% down and up) on
average during the fourth quarter
of 2022.The Monetary Policy
Committee of the Central Bank of
Egypt decided in its meeting on
Thursday, September 22, 2022, to
maintain the overnight deposit and
lending rates and the central bank’s
main operation rate at the level of
11.25%, 12.25% and 11.75%,
respectively, for the third time this
year, for the fourth time in this year,
The effect of the noticeable rise in
world prices of basic commodities,
the disruption of supply chains and
the rise in freight costs and to curb Source: Central Bank of Egypt
inflation.
Experts attributed the reasons for this increase to moving Gasoline and diesel prices and the
devaluation of the pound against the dollar, in addition to the increase in global commodity
prices, supply chain turmoil, and rising freight costs, in addition to the fluctuations in financial
markets in emerging countries, leading to domestic inflationary pressures.
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Egypt received foreign direct investment in the fiscal year 2020/2021 by about $5.2 billion,
compared to $7.5 billion in 2019/2020 and about $8.2 billion in 2018/2019. Recording a decrease
in net foreign direct investment by the end of the fiscal year 2020/2021 to a record $5.2 billion,
however, according to International Monetary Fund estimates, it is expected that with the
beginning of 2021/2022, the foreign direct investment will take an upward trend until it
reaches about $17 billion in 2024/ 2025, Egypt will become the first among the top 5 recipients
of foreign investment flows on the continent. Egypt ranked 73rd out of 109 countries in the
index of countries' attractiveness to foreign direct investment in 2020, compared to 74th in
2019.
The United Nations report indicated that the economic reforms implemented by the
Egyptian government have improved macroeconomic stability and boosted investor
confidence in the country and that although foreign direct investment is still driven by the
oil and gas industry, there is a portion of investments in the non-oil economy, especially in
The field of communications, consumer goods, real estate, and finance.
Italy accounts for 41.2% of foreign
direct investment in Egypt, then
Belgium in second place with 14.9%
of total inflows, and the United
States comes in third place with
13.7%, then the United Arab
Emirates with 6.3%, France with 4%,
and Saudi Arabia with 2.6 %. In
terms of sectors, the petroleum
sector accounted for 62% of the
total foreign direct investment, the
manufacturing sector got 10%, the
contracting sector 4%, the finance
sector 11% and the real estate sector
5%. Source: Central Bank of Egypt
By a significant difference, the Republic of the Congo ranked second among the largest
African countries that received foreign direct investment in 2020, with a value of 4 billion US
dollars, a decrease of 13% from the previous year, and South Africa ranked third, and Nigeria
ranked fourth with investments of 5.5 billion dollars. down 40%, and Ethiopia in fifth place.
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Source: Central Bank of Egypt
ANNUAL
GROWTH RATE INCREASE
CAPMS announced that the unemployment rate in Egypt has been reduced to 7.2% in the
second quarter of 2022, from 7.4% in the last quarter of 2021, a decrease of 0.2%. The reason
for the decrease is due to the increase in the number of workers by 297 thousand during The
current quarter compared to the previous quarter and the decrease of the unemployed by
55 thousand unemployed, which led to an increase in the labour force by 242 thousand
individuals.
The Egyptian budget deficit amounted to 7.7% of GDP in the fiscal year 21/20, down from
7.90% in the previous year. He also expected the budget deficit to decrease to 6.7% in 2021/22
and reduce the public debt rate as a percentage of GDP to reach 89.0% by the end of the
year. June 2022, which requires achieving a primary surplus of up to 1.5%. The government
also aims to reduce the debt to reach 84.9% of GDP in June 2024.
It is expected that the total public revenues in 2022/2021 will reach about 1365.2 billion
pounds, with a growth rate of 19.1% compared to 18.8% last year.
The budget for the fiscal year 2021/2022 aims to record an improvement in the state’s
general financial indicators, through an increase in the annual growth rate of revenues over
the growth rate of expenditures, which will reduce the surplus in revenues.
The public revenues in the new budget projections for the fiscal year 2021/2022 are
estimated at about EGP 21,365 billion. 19.2% of the GDP, as it is expected that the budget
revenues will cover about 69.7% of expenditures in FY20/2021..
The total expenditure is expected to reach LE21837 billion in 2021/2022), accounting for about
9.25% of GDP (compared with approximately 3,1614 billion in 2020/2021) and this framework
should be noted that the restructuring of spending Among the most important features of
the new budget
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The value of Egypt's foreign trade grew by about $3.82 billion during January and February
2022, to record about $23,019 billion, compared to $19.199 billion during the same two months
of 2021, with a growth of 20%.
The value of Egypt’s exports increased by 38.7% during the months of January and February
2022, to record 8.168 billion dollars, compared to 5,887 million dollars during the same two
months of 2021. $61 billion compared to $776 million, and Egypt’s exports of crude oil increased
by 94.4 percent to $591 million, compared to $304 million.
The value of Egypt’s non-oil exports during January and February increased by 24.1 percent
to $5.967 billion in compared to $4.807 billion during the same two months of 2021.
The value of Egypt’s imports rose
during January and February 2022
to record $14.851 billion, compared
to $13.312 billion during the same
two months of 2021, with a growth
rate of 11.6 percent. 12.1 billion
dollars.
The value of Egypt’s imports of
petroleum products increased
during the first two months of this
year by 49.2% to reach $1,107 billion,
compared to $742 million during
the same two months of 2021.
Source: Central Bank of Egypt
Egypt’s imports of crude oil declined by 13.8 percent during January and February 2022 to
reach 406 million $ 471 million in the same two months of 2021.
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CURRENT INSTABILITY
BALANCE OF PAYMENT
The balance of payments during the fiscal
year 2020/2021 achieved a total surplus of
about $1.0 billion, compared to a deficit of
about $8.6 billion during the fiscal year
2019/2020, affected by the Corona pandemic
that swept the world, and this total surplus
was achieved despite the current account
deficit rising to About $18.4 billion in
2020/2021, compared to about $11.2 billion
during the previous fiscal year.
This rise in the current account deficit is temporary. It came as a result of the noticeable
decline in tourism revenues by 50.7% to record $4.9 billion in 2021 compared to $9.9 billion in
the previous year, affected by The strong shock to the tourism sector due to the Corona
pandemic.
This surplus is due to the realization
of the capital and financial account,
which amounted to about $23.4
billion, compared to $5.4 billion
during the previous fiscal year
2019/2020, a reflection of the
remarkable improvement in foreign
investments in the stock portfolio,
as the investments in the stock
portfolio in Egypt turned into a net
inflow of about 18.7 One billion
dollars, compared to an outflow of
about 7.3 billion dollars.
Source: Central Bank of Egypt
The decline of foreign direct investment in Egypt to reach inward was limited to about 5.2
billion dollars, compared to 7.5 billion dollars in the previous year.
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EGYPT MAIN KEY PLAYERS
ECONOMIC INDICATORS
indicators 2018 2019 2020 2021 2022F 2023F
Real GDP growth (%) 5.30% 5.60% 3.60% 2.8% 5.2% 5.6%
Inflation (CPI, %) 14.40% 9.20% 5.50% 8.90% 9.40% 8.80%
merchandise exports
28 29 22 25 27 30
in Billions of dollars
Change in
merchandise exports, 20 2 -22 11 11 10
in percentage
Services exports in
24 25 15 19 23 25
billion US dollars
merchandise imports
57.6 66 46.1 53.3 59.6 64.2
in the billions of dollars
Change in
merchandise imports, 10 14.4 -30.1 15.7 11.8 7.6
in percentage
Services imports in
18.7 13 10.7 12.5 14.2 15.9
billion US dollars
Current account (USD
-6.3 -10.5 -13.1 -13.7 -13.5 -13.7
bn)
Current account %
-2.3 -3.1 -3.8 -3.7 -3.4 -3.1
GDP
EGP/USD exchange
17.8 16.8 16.1 17.3 18.1 19
rate (period avg)
total External debt 98.7 113.2 131.5 143.2 153.9 163.9
Government balance%
-9.5 -8 -11.2 -15.1 -13.1 -11.8
of GDP
Population (mn
98.4 100.4 102.3 104.2 106.1 108
person)
GDP/capita, current
2798.4 3349 3354.1 3531.8 3789.8 4029.4
(USD)
Source: Oxford Economics Report
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Egyptian Macroeconomics Outlook 2022
