Egypt’s economic and political fortunes have been uncertain for the past several years. With numerous challenges from political transition to domestic security and economic pressures, whether Egypt would be able to overcome the challenges it faced was not clear. However it seems that the country is managing to come back from the edge with recent developments indicating that opportunities are emerging and there are reasons to hope for rapid improvement in the coming period. While challenges remain, Egypt’s outlook appears to be improving, and the country’s economy is attracting praise and investor interest regionally and globally.
Investors have poured money into Egyptian debt and equities since authorities started overhauling the economy by removing most currency restrictions, raising interest rates and cutting fuel subsidies. Egypt has received US$ 40 bn in investments and transfers from abroad since floating its currency in November and securing the largest International Monetary Fund loan to a Middle East nation. The funds include receipts from exports, investors selling dollars to buy Egyptian assets, and the exchange of dollars for Egyptian pounds, either on the local market or through remittances.The majority of Egyptians, however, have yet to feel the economic tides turning. About half of Egypt’s 93 million people live below or near the poverty line. Other areas have been more positive. The budget deficit hit the lowest level in five years in the 12 months ended June. Stocks have surged nearly 60% in local currency terms, and the government expects foreign direct investments to exceed US$ 10 bn this fiscal year. Like most African economies, a major challenge for Egypt is economic diversification from its dependency on its biggest earners – the Suez Canal and tourism – which have proven volatile in recent years. But the government is confident that the tourism industry will recover.