Coface Group


Population 86.7 million
GDP per capita 3,304 US$
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major macro economic indicators

  2013  2014 2015 (f) 2016(f)
GDP growth (%) 2.1 2.2 4.6 3.8
Inflation (yearly average) (%) 6.9 10.1 11.0 8.8
Budget balance* (% GDP) -14.1 -13.6 -11.7 -10.2
Current account balance (% GDP) -2.4 -0.8 -3.7 -5.0
Public debt (% GDP) 89.0 90.5 90.0 89.3


(e) Estimate   (f) Forecast 

* Fiscal year from July to July


  • †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


A vigour that is running out of steam in 2016

After a resurgence of growth in 2015, activity is likely to slow down moderately in 2016. The positive effects resulting from President Sissi taking office have started to fade in 2015 in spite of the strong positive signals from the authorities. In 2016, Egypt will have to cope with numerous shocks while suffering from the structural weaknesses of its economy. The low price of Brent will continue to hurt the oil sector, which accounts for 13% of Egyptian exports. The upswing in tourism which was one of the growth drivers in 2015 will probably be jeopardised: The attack targeting the Russian civilian aircraft in the Sinai is likely to limit tourist arrivals from Russia and Eastern Europe, which accounted for 30% of arrivals in 2015. The downward trend observed in the manufacturing sector is expected to continue. The factors explaining the slowdown in manufacturing production will continue to have an impact in 2016. Although inflation will fall in 2016 it will remain high, driving up production costs. Likewise, the persistent problems in terms of input supply, power cuts and lack of foreign currencies will continue to darken the outlook for this sector. The upswing in public investments thanks to the Suez Canal expansion project has offset the slowdown in activity in the private sector. In 2016, the Egyptian authorities are expected to continue to stimulate growth by increasing the number of public-private partnerships, facilitated by the investment law reform in April 2015. A total of 12 projects have been identified and are scheduled to be implemented in 2016 in different sectors (electricity, desalination, and mining). In the medium term, the repercussions of the Sharm el-Sheikh conference on investment and the development of the gas field discovered by ENI should help increase the potential growth.


Consolidation of government spending

The consolidation of public finances initiated by President Sissi led to a reduction in the fiscal deficit in 2015 amid a fall in donations to Egypt. The introduction of a smart card system for the most disadvantaged population groups has led to a reduction in the proportion of subsidies in government spending. Likewise, the stagnation of civil servant pay has limited current spending growth. In order to boost activity in 2016, current as well as investment spending is expected to grow. The welfare programmes targeting education and healthcare presented as part of the 2014/2019 five-year development strategy are scheduled to be launched in 2016. The authorities are planning to finance this spending increase through an increase in mandatory contributions associated with a broadening of the tax base. A reform completing the introduction of VAT should be ratified by the new Parliament in 2016. The expansion of the Suez Canal that will increase the number of transits through the canal will also increase tolls, even though the slowdown in global trade is likely to limit its growth.

Even though the debt remains high in absolute terms, the reduction in the fiscal deficit since 2014 has led to a slowdown of its increase. The return to political stability and the positive signals the authorities have sent to the financial markets have made it easier to obtain external borrowing. A euro-denominated bond issue of $1.5 billion was launched in April 2015.


The external accounts remain in the red

The current account deficit is expected to persist in 2016 because of a contraction in exports and a fall in tourism revenue. Exports of oil, which was the largest export item in 2014, have fallen nearly by 30% in fiscal year 2014/2015, thereby worsening the trade deficit. Imports should continue to grow although imports of capital goods have been slowing down, which reflects the slowdown in the manufacturing sector. Furthermore, the country’s foreign exchange reserves are shrinking; the level was lower than three months of imports in November 2015. This decline in reserves has led the central bank to impose strict exchange control. The various regulations in this area continue to put a damper on business activity by generating transfer problems. The devaluation of the pound in November 2015 from 7.83/$ to 8.03/$ nevertheless points to an easing of the exchange-rate policy after the appointment of Tarek Amer as central bank governor.


General elections marked by spirit of consensus

Following the advent of president Sissi in May 2014, Egypt, which has been without a parliament since June 2012, held its first general elections in November 2015. Marked by a low participation rate (28%), they were won by the majority party close to the president named "For the Love of Egypt”, which obtained 120 out of 528 seats according to a list ballot system. The president must choose 28 deputies, the rest are elected according to a single-member constituency system.

Despite a more peaceful climate overall, the coming period promises to be challenging for the country. Egypt, which has based its foreign policy on the fight against terrorism, must cope with the growing threat of jihadists on its own territory in the Sinai in particular, where the Islamic State claimed responsibility for the attack on the Russian civil aircraft, but also on the Libyan border where jihadists movements are gathering strength as a result of the political vacuum in Libya.


Last update: January 2016

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