The strong macroeconomic performance in Egypt in light of the Corona pandemic, and the continued attraction of foreign investors herald financial stability in the near term, but it will not solve the country's high poverty levels, which will become a political burden for the government.
This was stated in a report by the American website "Stratfor", which indicated that the Egyptian economic growth exceeded even the previous expectations of the Ministry of Finance in 2020, as witnessed by the Fitch Ratings Agency for Credit Rating and Deutsche Bank, And the International Monetary Fund that this economy achieved a growth rate of 3.5% of GDP this year, outpacing the performance of most of its regional peers.
According to the European Bank for Reconstruction and Development, Egypt's economy is now the only economy that receives funds from the European Bank for Reconstruction and Development, and is expected to avoid a recession in 2020.
The report stated that the Egyptian economy has benefited from the policy of liberalizing the exchange rate since the government floated its currency in November 2016, which helped increase investor attractiveness by improving capital flows that decreased after the 2011 Arab Spring.
Egypt's economy is now the only economy that receives funds from the European Bank for Reconstruction and Development (Reuters)
Poverty and unemployment
Although Egypt is currently one of the strongest financial performers in the Middle East, which has strengthened its investment attractiveness even amid the economic pressures due to the epidemic, government safe safes do not translate into improving the standard of living for all Egyptians who are suffering in light of high levels of unemployment and low record activity in The vital tourism sector in the country due to the Coronavirus.
Cairo's declared economic success contrasts sharply with the fact that 32.5% of Egyptians now live below the poverty line, which threatens the country's long-term stability, and Egypt's external economic situation is under increasing pressure, especially if workers remittances decline in the near term.
Despite the overall growth of the economy, activity in the tourism sector is expected to decrease, which is a sector that employs 12% of Egyptians, and represents the source of 19% of the country's hard currency by up to 70% during the year due to the continuing Corona pandemic.
According to Egyptian official figures, the unemployment rate has increased from 7.7% to 9.6% during the past six months, and Cairo's continuous pursuit of business-friendly economic reforms instead of measures that address the increasing levels of poverty, may backfire by increasing the risks of social unrest that impedes Ultimately foreign investment.
Attracting investors
In addition, Egypt's steadfast commitment to structural economic reforms, including cutting subsidies and increasing taxes and fees, attracts foreign investors and institutions, and enables economic growth, but it also increases feelings of social vulnerability among Egyptians.
Indeed, some of the same policies that ensured macroeconomic stability in Egypt and investor attractiveness have increased poverty rates and endangered some social programs, leading to more public discontent.
During the summer Cairo increased costs for utilities and public transportation, and although this helped provide more revenue for the government, it sparked anti-government demonstrations across the country during the last two weeks of last September.