2
Egypt Against the backdrop of a series of global shocks, the Egyptian economy is facing a cost-of-living crisis and balance of payments adjustments. Economic growth slowed in 2022 and is projected to recover only gradually. Consumption will remain weak for some time due to high inflation, despite fiscal support. In the face of tight financial conditions and uncertainty, business investment will remain subdued, while public investment is being scaled back. Egypt remains particularly vulnerable to abrupt changes in capital flows and currency fluctuations. The authorities should continue to fight inflation and provide targeted support to the most vulnerable. The government should focus on and credibly commit to reducing public debt in the medium term. This would help restore investor confidence, thereby reducing financing costs and currency depreciation pressures. Finally, the government should push ahead with its structural reform agenda, including the recently announced divestiture programme, which needs to be clarified further and implemented effectively. This would unleash private sector activity and pave the way for more sustainable growth. The economy has suffered from a dual crisis Economic activity has slowed since the outbreak of Russia’s war of aggression against Ukraine. Egypt has been hit particularly hard by rising food prices in international markets, given its reliance on food imports including those from Russia and Ukraine. Inflation has surged since early 2022. It was initially driven by food prices but has spread since, pushed up by substantial currency depreciation. Both headline and core inflation have reached record highs, with the costs of soaring food prices being borne disproportionately by poor people. Nonetheless, consumption has been sustained by a series of fiscal support packages. Notwithstanding the slowdown in economic activity, the unemployment rate (according to the ILO definition) has barely changed over the past year, while the share of informal jobs remains important.
Egypt
1. General government gross debt. Source: Central Agency for Public Mobilization and Statistics; and IMF, World Economic Outlook database. StatLink 2 https://stat.link/ejncxi
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023