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The Cost of Egypt’s Continued Economic Growth

MIN READOct 21, 2020 | 22:02 GMT

Policemen walk near an overlook at the Giza Pyramids in Egypt ahead of a ceremony commemorating the launch of the site's first environmentally-friendly bus and restaurant on Oct. 20, 2020.

(KHALED DESOUKI/AFP via Getty Images)

Egypt’s strong macroeconomic performance amid the COVID-19 pandemic and continued appeal to foreign investors hold promise for Cairo’s near-term financial stability. But it does not resolve the country’s stubbornly high poverty levels, which will eventually become a political liability by stoking anti-government sentiment. In an address on Oct. 18, Egypt’s finance minister said economic growth has exceeded even the finance ministry’s previous projections for 2020. This confidence reflects recent positive adjustments to Egypt’s economic outlook projections by Fitch Ratings, Deutsche Bank and the International Monetary Fund -- all of which now see Egypt’s economy growing at 3.5 percent of GDP in this year, exceeding the performance of most of its regional peers. But Cairo’s ongoing pursuit of business-friendly economic reforms in lieu of measures that address rising poverty levels could backfire by raising the risk of social unrest that ultimately deters foreign investment. ...

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