Economic Outline

Economic Indicators

The Egyptian economy was one of the most resilient and continued growing during the COVID-19 pandemic. The positive trend accelerated in 2022 when GDP was estimated to have grown by 6.7%, although growth decelerated to 4.2% in 2023. The country faced challenges with elevated inflation and imbalances in its balance of payments. Despite these issues, fiscal support has maintained private consumption, which is expected to pick up momentum as inflation eases. Household consumption remained resilient, supported by controls on energy prices, food subsidies, and a series of fiscal packages. On the flip side, business investment has sharply contracted, attributed to heightened financial constraints and increased uncertainty, with a gradual recovery anticipated. The IMF expects growth to reach only 3.6% this year before it picks up to 5% in 2025.

In recent years, Egypt implemented an economic reform program comprising fiscal consolidation measures, the introduction of a floating exchange rate and large cuts in subsidies. The budget for FY 2023/24 anticipates an enhancement in the primary surplus, increasing to 2.5% of GDP from the previous fiscal year's 1.6%. However, the budget deficit was estimated at 4.6% of GDP in 2023, primarily due to elevated debt servicing costs. The government's strategy involves diminishing untargeted energy subsidies and broad-based food subsidies, while simultaneously expanding cash-transfer programs directed towards the most vulnerable. Public investment, including self-financed investments by public entities, is expected to see a substantial increase in FY 2023/24: notably, in October 2023, the government announced hikes in public sector wages and pensions, along with adjustments to personal tax exemptions. Therefore, the latest IMF outlook sees a budget deficit above 10% over the forecast horizon. The public debt-to-GDP ratio increased from 88.5% in 2022 to 92.7% in 2023, although the share in the hands of external lenders only accounts for around one-third of GDP. The exchange rate has shown minimal fluctuation since the beginning of 2023, following a series of devaluations that saw the Egyptian pound lose approximately 50% of its value against the US dollar since early 2022. The authorities continue to oversee the exchange rate and impose restrictions on certain foreign exchange transactions. The OECD invited Egyptian authorities to continue fighting inflation (at 23.5% in 2023) by keeping monetary policy tight and restraining public investment projects that are not urgently needed.

The unemployment rate stood at 7.1% in 2023, according to the IMF estimates, with female unemployment being around four times higher than for males. After a slight uptick to 7.5% this year, it is expected to return around 7.1% by 2025. It is estimated that three-quarters of all employees are paid as unofficial workers, 29.7% of the population lives below the poverty line and 4.5% live in extreme poverty, a ratio that has been decreasing in recent years (CAPMAS – latest data available). Finally, GDP per capita (PPP) was estimated at USD 17,123 in 2023 by the IMF.

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