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What the World Bank had to say about Egypt

The World Bank recently released its Global Competitiveness Report, where Egypt dropped by 11 positions – and here is why.
To download the report on Egypt, click here:

"Egypt drops by 11 positions to reach 118th place in this year’s Global Competitiveness Index (GCI). This assessment is likely influenced by the country’s continued transition since the events of the Arab Spring. The deteriorating security situation and tenacious political instability are undermining the country’s competitiveness and its growth potential going forward. Although resolving political friction needs to remain the priority as this Report goes to print, many of the underlying factors that will be decisive about the sustainability of the country and the cohesion of the society over the medium to longer term are economic in nature. Establishing confidence through a credible and far-reaching reform program will be vital to the country’s future and to realizing the considerable potential of the country’s large market size and proximity to key global markets. According to the GCI, three areas are of particular importance.

First, the macroeconomic environment has deteriorated over recent years to reach 140th position mainly because of widening fiscal deficit, rising public indebtedness, and persisting inflationary pressures. A credible fiscal consolidation plan, accompanied by structural reforms, will be necessary in order to maintain macroeconomic stability in the country. This may prove difficult in times of rising energy prices, as energy subsidies account for a considerable share of public expenditure. However, better targeting of subsidies could allow for fiscal consolidation while protecting the most vulnerable.

Second, measures to intensify domestic competition would result in efficiency gains and contribute to energizing the economy by providing access to new entrants. This, in turn, would make the country’s private sector more dynamic, thereby contributing to job creation.

And third, making labor markets flexible (141st) and more efficient (145th) would allow the country to increase employment in the medium term."