Investment Should Be The Growth-Driver For Egypt’s Economy

Egypt’s economic structure is changing as it faces a number of challenges. Private consumption, the driving engine for the country’s economy, is expected to continue to slow down due to high inflation rates (31.5% in April 2017).

Where it used to grow in the range of 4%, it is estimated to grow by 2.5% in 2016/17 and 3% in 2017/18. Government consumption cannot take over this decline given the high budget deficit estimated at 10.9% in 2016/17 and at 9.1% in 2017/18.

At the same time, high unemployment rates at 12% in the first quarter of 2017 will not help private consumption to keep its leading role in economic growth.

However, unemployment has declined from 12.4% in last quarter of 2016 and 12.7% in first quarter of 2016, and it should continue to decline to 11.5% in 2017/18, supported by increasing investments.

The government is also aiming to improve the investment contribution to 16% of GDP in the coming financial year, up from its current contribution at 14%.