Egypt's economy is led by public services which contributes as much as 50% of the country's GDP. This figure is the most clear indicator of the socialist thinking and principles which belie the foundations of Egypt's post 1952 revolution economy. This is further enforced by the fact that Egypt's second biggest income earner is the Suez Canal, which also is a nationalised company. Egypt's other industries and exports include:
• Tourism
• Agriculture
• Manufacturing Industry (textiles, food processing, chemicals, construction, cement, metals)
• Oil exports
• Remittances received from Egyptians abroad
However the Egyptian society and political structure is facing new challenges in the form of increasing unemployment rate (more than three million graduates are out of work whilst almost 900,000 school-leavers join the market each year, but only approx. 250,000 new jobs are created). Another challenge is the country's poor where according to estimates approximately 15% of Egypt's population lives in poverty. Presently Egypt's economy is the second largest in the Arab world (after Saudi Arabia), however the economy is under pressure to expand and to create jobs for the country's rising poverty and unemployment rate.
Taking note of the fact that increased unemployment and poverty are considered as threats against Egypt's political stability and economic progress, the Egyptian government has embarked on a reform programme to streamline and expand the economy. Current plans call for:
• Increase in foreign and local investment in new and existing industries
• Increase in growth of the private sector
• Streamlining and reform of the country's massive public sector
• Reduction of tariffs and business taxes for new and existing businesses
• Reduction in bureaucracy and red tape
However one over riding issue must be taken into consideration. That is as far as the Egyptian government is concerned, social and political stability are top priorities for the government. Therefore any change in the country's economic infrastructure or regulation as part of a reform plan which may threaten the country's political stability (such as massive lay-offs or large price increases especially for basic commodities) are at first to be avoided if possible. If they can not be avoided, they are then to be carried out in stages and in a manner which will soften and / or reduce the impact on the sectors of the public which will be affected, thus reducing risk to social and political stability of the country. Therefore gradual and slow are two key words which are quite suitably and realistically associated with the recent implementation of the recommended reforms to the Egyptian economy.
By: Meir Javedanfar - All contents of this page are protected by International Copy Right Laws ©
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