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- GDP (PPP):
- $1.0 trillion
- 4.2% growth
- 2.5% 5-year compound annual growth
- $11,850 per capita
- Inflation (CPI):
- FDI Inflow:
Egypt’s economy has been experiencing an extended period of instability and uncertainty that reflects in no small measure the political turmoil of recent years. Weak institutional capacity and stiff opposition from interest groups has stymied some necessary economic reforms.
Nonetheless, the government has been keen to enhance the business environment and consolidate public finances through fiscal reforms, and confidence has improved. Recent policy choices include measures to induce more dynamic investment and spur much-needed private-sector job creation. Reform of fuel subsidies has been a notable achievement. The intensity of the government’s commitment to institutional and structural reforms will be critical to future progress.
The army ousted President Hosni Mubarak in 2011. The ensuing period of political instability included dissolution of the parliament in 2012, recurring street demonstrations, and an army coup that ousted the increasingly unpopular government of Mohamed Morsi of the Muslim Brotherhood’s Freedom and Justice Party in 2013. A new constitution was approved by referendum in January 2014. Current President Abdel Fattah el-Sisi was elected in May 2014. Despite continued terrorist attacks, the vital tourism industry has begun to revive, and there are signs of increased investment and economic growth. Egypt has only a small amount of arable land, but farming is an important part of its relatively well-diversified economy.
Although protection of property rights is slightly improved overall, it weakened in the Sinai in 2015 due to government counterinsurgency efforts there. The rule of law remains highly unstable, and the judicial system has become more politicized, although the judiciary has become more efficient in resolving commercial disputes. Corruption pervades all levels of government, and official mechanisms for investigating and punishing it are very weak.
The top individual and corporate income tax rates are 25 percent. Other taxes include a property tax and a general sales tax. The overall tax burden equals 11.9 percent of total domestic income. Government spending has amounted to 35.1 percent of total output (GDP) over the past three years, and budget deficits have averaged 12.7 percent of GDP. Public debt is equivalent to 87.7 percent of GDP.
Ongoing regulatory reforms have made starting a business less time-consuming, but without needed reforms in other critical areas, they have not had much real impact. In the absence of a well-functioning labor market, informal labor activity persists in many sectors. In 2016, the government increased prices for petroleum products and electricity as part of an effort to reduce the burden of energy subsidies on the state budget.
Trade is moderately important to Egypt’s economy; the value of exports and imports taken together equals 35 percent of GDP. The average applied tariff rate is 7.4 percent. Foreign investment in several sectors of the economy is restricted, and numerous state-owned enterprises distort the economy. The state’s presence in the financial sector has been phased out, but modernization of the sector has progressed slowly.