The regularity and richness of the annual Nile River flood, coupled with semi-isolation provided by deserts to the east and west, allowed for the development of one of the world's great civilizations. A unified kingdom arose circa 3200 B.C., and a series of dynasties ruled in Egypt for the next three millennia. The last native dynasty fell to the Persians in 341 B.C., who in turn were replaced by the Greeks, Romans, and Byzantines. It was the Arabs who introduced Islam and the Arabic language in the 7th century and who ruled for the next six centuries. A local military caste, the Mamluks took control about 1250 and continued to govern after the conquest of Egypt by the Ottoman Turks in 1517. Completion of the Suez Canal in 1869 elevated Egypt as an important world transportation hub. Ostensibly to protect its investments, Britain seized control of Egypt's government in 1882, but nominal allegiance to the Ottoman Empire continued until 1914. Partially independent from the UK in 1922, Egypt acquired full sovereignty from Britain in 1952. The completion of the Aswan High Dam in 1971 and the resultant Lake Nasser have altered the time-honored place of the Nile River in the agriculture and ecology of Egypt. A rapidly growing population (the largest in the Arab world), limited arable land, and dependence on the Nile all continue to overtax resources and stress society. The government has struggled to meet the demands of Egypt's population through economic reform and massive investment in communications and physical infrastructure.
Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula
petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, zinc
Population - distribution
approximately 95% of the population lives within 20 km of the Nile River and its delta; vast areas of the country remain sparsely populated or uninhabited
Arabic (official), English and French widely understood by educated classes
CAIRO (capital) 18.772 million; Alexandria 4.778 million (2015)
- Conventional long form
- Arab Republic of Egypt
- Conventional short form
- Local long form
- Jumhuriyat Misr al-Arabiyah
- Local short form
- Geographic coordinates
- 30 03 N, 31 15 E
- Time difference
- UTC+2 (7 hours ahead of Washington, DC, during Standard Time)
accepts compulsory ICJ jurisdiction with reservations; non-party state to the ICCt
Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but opened up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni MUBARAK.
- External debt stocks
- US$ 46,584,669,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -16,786,500,000
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 65,923,286,106
- Exports of goods and services
- US$ 34,818,024,909
- Total Merchandise Trade
- FDI, net inflows
- US$ 6,884,800,000
- Commercial Service Exports
- US$ 18,092,400,000
cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats
textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures
- crude oil and petroleum products, fruits and vegetables, cotton, textiles, metal products, chemicals, processed food
- Saudi Arabia 9.1%, Italy 7.5%, Turkey 5.8%, UAE 5.1%, US 5.1%, UK 4.4%, India 4.1% (2015)
- machinery and equipment, foodstuffs, chemicals, wood products, fuels
- China 13%, Germany 7.7%, US 5.9%, Turkey 4.5%, Russia 4.4%, Italy 4.4%, Saudi Arabia 4.1% (2015)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Tourism potential
- Manageable external debt
- Political and financial support from the Gulf monarchies and western countries
- Poverty (40% of the population) and high unemployment
- Twin deficits
- Low level of foreign exchange reserves
- Banking system subject to sovereign risk
After a dynamic start to the year, the Egyptian economy had shown signs of a loss of momentum in 2016. The dollars shortage and the measures taken by the central bank in response curbed imports of goods and in turn limited manufacturing activity. Growth in consumption, which is still the main driver of activity, was limited by the erosion of purchasing power resulting from the overall rise in prices. Household confidence worsened and reached a low point at the end of the year. Exports continued to suffer from the over-valuation of the Egyptian pound. Likewise, the drop in the number of tourists continues to hit the sector. In November 2016, the Egyptian authorities adopted a set of economic measures, including the liberalization of the foreign exchange market and the withdrawal of a number of subsidies enabling them to sign a loan agreement for USD 12bn under the Extended Credit Facility with the IMF. Despite IMF support, 2017 is likely to be characterized by a depressed economic environment. The transition from a fixed exchange rate regime to a floating exchange rate one in November 2016 is expected to help the country to respond to the dollars shortage which was squeezing the economy, but will consequently contribute to a sharp rise in inflation. The leading sectors in 2016, namely construction and distribution, are likely to be hampered by the adverse effects of inflation on household consumption. Public spending will also undergo a noticeable cut, due to the authorities' limited room for maneuver. Tourism is likely to continue to contract, even with the resumption of flight between Russia and Egypt. Private investment is expected to find a second wind, after the devaluation of the Egyptian pound and Egypt's attractiveness could be strengthened accordingly.
The IMF program aid is expected to foster the consolidation of public finances, leading to a slight decline in public deficit in 2017, whereas the latter increased in 2016. Civil service wages, subsidies and debt servicing continue to be the main items of government spending and account for 75% of public spending. The moderation in the wage bill will continue thanks to weaker wage growth. The increase in fuel prices will help limit the effort on subsidies. Income should also increase slightly. The gradual recovery in the manufacturing sector expected after the devaluation of the Egyptian pound should help increase the share of direct tax in financing the budget. The introduction of VAT passed by parliament in August 2016 will, moreover, contribute to widening the tax base. Finally the increase in taxes on tobacco and alcohol could boost fiscal revenues by 0.8 points of GDP. The reduction in the public deficit should lead to a slower rise in the public debt, which is mainly domestic. The debt to GDP ratio was up by 5 points in 2016 because of the accumulated deficits. The liberalization of the exchange rate system is expected to favor the arrival of foreign capital on the market and help increase yields on Egyptian government bonds. Finally, the agreement signed with the International Monetary Fund should send a positive signal to other international donors. Concurrently with IMF aid, Egypt will receive USD 1.5bn from the African Development Bank, as well as USD 3bn from the World Bank.
The current account deficit is expected to stabilize in 2017. Oil exports will remain constrained by the fall in oil prices and by weak performances in the sector, but total exports are expected to benefit from the Egyptian pound depreciation. The increase in export competitiveness will, however, only partially offset the drop in tourism income, which will continue to erode the balance of services. Imports, which were completely liberalized after the change in the foreign exchange regime, are expected to climb. Revenues from the Suez Canal are also projected to be held in check, echoing the slowdown in world trade. After growing by 2% in 2015/2016, flows of FDI are, however, expected to rise gradually.
Egypt's social climate could worsen in 2017. Although a section of the population remains in solidarity with the government, the risk of social unrest is growing, given the food shortages and the significant increase in inflation. The country continues, moreover, to face the threat of terrorism and is still endangered by more attacks targeting the Sinai and Cairo. The deterioration of the social and security environment could dampen the economic recovery and particularly the return of tourists and foreign investors. On this basis, a reform of the investment code and an improvement in the business climate will be necessary in 2017, if the country wants to benefit from the positive consequences of the devaluation and use foreign investment to support activity.
2016 remained characterized by a change in direction of Egyptian foreign policy and by worsening links with Saudi Arabia, reflected in the halt to Saudi aid and oil deliveries. This shift in Egyptian diplomatic relations is likely to benefit Russia and the United States with which President Sissi intends to establish privileged ties.