| The Economy |
 |
 |
 |
 Forming the bridge between the Middle East and Africa, the significance of Egypt’s geographical position has a positive effect on its economy. Although Egypt’s economy is not the most advanced, it can certainly be considered stable; thanks in part, to a variety of government reforms and initiatives to modernise. In fact, Goldman Sachs has identified Egypt as being among the Next-11 BRIC/New Wave countries projecting that the GDP will reach US$2,461billion by 2050 with real year-on-year growth over the period consistently in excess of 5%.A new development plan for the country commenced in 2007. In his address in the Assuit Governorate in March 2007, President Murburak stated: “This year we are starting a new development Plan till 2012, which is the most ambitious plan in our history, going ahead in its implementation with an efficient economy that surpassed years of recession and regained its ability to attract investments, enhance development and increase job opportunities”. There are many reasons to be optimistic for Egypt’s economic future. Economic stability has underpinned growth. The Egyptian economy began real growth in 2003/2004 when it accelerated to 4.2 % recovering from a slowdown which was as a result of external economic shocks including September 11, oil prices and regional conflict. This recovery has been ongoing (see Figure 1) The Egyptian economy grew at an annualised rate of 7.5 % in the January-March quarter of 2008. This compares with 8.1% in the October-December quarter of 2007 and 7.4% in the January-March quarter of 2007. Egypt’s Prime Minister, Ahmed Nazif, and his ministers expect the economy to expand at a fraction over 7% during the 2008 fiscal year. The fastest growing sector is tourism at between 23% and 27%. Macroeconomic policies have led to a strengthening of market conditions, most notably measured by increased domestic demand and a rise in business and investor confidence. This should help to cushion the economy from any negative external developments. Figure 1: GDP Growth in Egypt (%)
 The Egyptian government are working to bring down inflation by one percentage point per annum and the Egyptian Pound has continued to stabilise since it was freely floated in January 2003. Government debt remains manageable and is expected to benefit from the anticipated strong GDP growth, resumption of privatisation and stabilisation of the exchange rate.Reforms undertaken by the government have allowed more foreign individuals and companies to invest in Egypt. Foreign Direct Investment (FDI) reached US$6.1billion (5.7% of GDP) in 2005/2006, while in the first half of the 2006/2007 financial year, FDI had already reached a total of US$ 7.2billion. Egypt is the World Bank Doing Business 2008 top reformer across 178 economies. Egypt made the single fastest climb in the overall ranking - jumping 26 places in one year. Its reforms cut deep - with reforms in 5 of the 10 areas that are studied as indicators of the ease of doing business. This is the second time in 5 years that Egypt is among the 10 most reforming countries in the world. The economic future of Egypt seems to be stable and solid. It has a progressive government and there is continued investment into making the economy more transparent and flexible. Egypt is set to continue in its growth and become one of the top 20 economies by 2050.  
|
