Economy of Egypt - Macroeconomic Trend

Macroeconomic Trend

Egypt has a stable economy enjoying continuous growth, averaging 4%–5% in the past quarter-century. The economy embarked on various stages of development during which the public and private sectors played roles varying in relative importance as follows:

• The First Republic: 1952-2012,

• • Import substitution and nationalization, 1952–1966, during which the first program of industrialization in 1957 was established and led by the public sector in heavy industries such as iron and steel and chemical industries. Nationalization reduced the relative importance of the private sector.
  • Inter-War, 1967–1973, adversely affected the performance of the economy and public sector role in import substitution.
  • Openness Euphoria, 1974–1982 during which policies were introduced to encourage Arab and foreign investment through a series of incentives and liberalizing trade and payment; the economy expanded but this proved unsustainable and growth consequently scaled back.
  • External Debt Crisis, 1982–1990, the external debt crisis and Paris Club re-scheduling and debt reduction.
  • Economic Reform, 1991–2007, reform policies were introduced to meet the terms of international institutions, lenders and donors, including wider incentives to the role of the private sector in all economic activities.
  • The Post Global Financial Crisis, 2008-2011, soaring food prices, especially for grains, led to calls for the government to provide more immediate assistance to the population of more than 40% in the "poverty tunnel" and to strike a "new deal" on agriculture policy and reform. Egypt faced the long term supply- and demand-side repercussions of the global financial crisis on the national economy. Egypt's gains from annual growth rates benefited the rich and failed to trickle down and reduce the poverty which increased to about 50% in 2011 leading to socioeconomic political instability and popular revolution on 25 January 2011.
• The Second Republic: 2012 -, Egypt need to strengthen the economy to exogenous shocks, improve productivity, competition, get out of the "informality trap," invest in human capital via social protection from a human right-based approach to correct for market failures and build good trust in governance. The biggest questions for the new president-elect and new government are how to address corruption at the level of the bureaucracy, citizens and parties; how to address the expectations of the Egyptian people; how to bring people from different backgrounds and different voices to support social accountability during economic and political transition to an active developmental state.