A macroeconomic study of the country egypt

Table of Figures

Introduction about Egypt

Arab Republic of Egypt lies in the North of Africa, the capital of it is Cairo, it has a population of about 80 million, it has a entire country of 1,002,450, and the currency of Egypt is the Egyptian lb. It ‘s good known for the longest river in the universe “ The Nile River ” , and its alone touristry topographic points such as the Pyramids in Giza which are besides considered one of the seven universe admirations. It ‘s besides known for bring forthing Cotton and Rice.

Major Historical Events in Egypt:

A well known historical event is the three Great Pyramids in Giza ; the antediluvian Egyptians started constructing them on around 2560 BC and took them 14-20 old ages to complete building them. The pyramids are named after the Pharaoh of Egypt Khufu, Khafre and Menkaure.

Egypt was independent from the British regulation on 28th of February 1922 after long old ages of agony, as it was controlled by the British Empire from 1883 until 1922.

The most recent event in Egypt is the revolution against the Egyptian President Hosni Mubarak ‘s. It started on 25th of January 2011 and ended successfully on the 11th of February 2011 with Hosni Mubarak ‘s surrender. Now Egypt is ruled by the Egyptian Military for a short term of clip until they select a new president.

Macroeconomic survey

Major Macroeconomic Indexs

Real GDP:

Real Gross Domestic Product is the rate of the stoping sum produced in a state during a given period regulated by the alterations in monetary values.

Year

2005

2006

2007

2008

2009

Real GDP

89,685,724,889 US $

107,484,034,648 US $

130,472,894,495 US $

162,836,363,636 US $

188,412,876,658 US $

hypertext transfer protocol: //data.worldbank.org/indicator/NY.GDP.MKTP.CD

Figure 1: Real GDP

The additions in the Real GDP over the old ages indicate to the additions in fabrication of goods and services, and partly to the additions in monetary values. In Egypt ‘s instance it started with the lowest rate on 2005 and increased easy during these five old ages to make the highest on 2009.

Real GDP Growth Rate:

Real GDP Growth rate calculates the amount of all sums produced within the geographical boundary line of the specified state, non sing the nationality of the units bring forthing them.

Year

2005

2006

2007

2008

2009

Real GDP

Growth

4.5 %

6.8 %

7.1 %

7.2 %

4.6 %

hypertext transfer protocol: //data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

Figure 2: Real GDP Growth

For Real GDP Growth rate, higher ratio is better for the place of the state. Year 2008 has the highest ratio. The bead from 7.2 % in 2008 to 4.6 % in 2009 shows a negative position in the Egypt ‘s state of affairs.

Unemployment Rate:

The Unemployment Rate indicates to the proportion of idle citizens of a specified state or country throughout a specified clip.

Sing Egypt ‘s Unemployment Rate here is what I have found:

Year

2005

2006

2007

2008

2009

Unemployment Rate

10.90 %

9.50 %

10.30 %

9.10 %

8.40 %

hypertext transfer protocol: //www.indexmundi.com/egypt/unemployment_rate.html

Figure 3: Unemployment Rate

The lower is the ratio per centum ; the better is the state of affairs of the state. The lowest was 2009 with 8.40 % which indicates to a really good place. The worst twelvemonth was 2005 with 10.90 % .

Current Account Balance ( in the Balance of Payments ) ( CAB ) :

CAB is the sum of all net income, net exports of goods, services, and the current transportations. It can be calculated by the sum of all influxs minus the escapes of a state in a specified period of clip in the weighing graduated table of payment.

This is the Current Account Balance for Egypt:

Year

2005

2006

2007

2008

2009

Current Account Balance

2,102,800,000 US $

2,635,400,000 US $

411,600,000 US $

-1,414,600,000 US $

-3,349,300,000 US $

hypertext transfer protocol: //data.worldbank.org/indicator/BN.CAB.XOKA.CD

Figure 4: Current Account Balance

In the undermentioned entry, the records Egypt ‘s net trade in services, goods, involvement, net incomes, gaining from rents, dividends, and transportation payments for illustration financess from pension and remittals of workers. These were calculated depending on an exchange rate base.

Figure 5: Current Account Balance for the last 30 Old ages ( International Monetary Fund )

The CAB was about changeless between 2005 and 2006, so in 2007 there was an enlargement, nevertheless in 2008 and 2009 there was a immense recession that hit about all the states in the universe.

Targets and financial indexs

In the average financial policy statement four financial indexs to be projected were proposed. This includes: financial shortage, revenue enhancement gross, gross shortage and entire outstanding liabilities all of these are moving as a per centum of GDP.

Ratio of Gross Fiscal Deficit to Nominal GDP:

Year

2005

2006

2007

2008

2009

Fiscal Balance,

Deficit

( % of GDP )

-9.6 %

-8.2 %

-6.7 %

-6.9 %

-6.4 %

Cash Deficit

-50,747.0

-56,545.0

-39,951.0

-56,823.0

-64,670.4

Overall Deficit

-51,643.0

-50,385.0

-49,160.0

-58,769.0

-67,344.0

Deficit asA % of GDP

-9.6 %

-8.2 %

-6.7 %

-6.9 %

-6.4 %

Figure 6: Deficit Percentage of the GDP

Figure 7: Relation between Cash Deficit & A ; Overall Deficit in the Past Five Old ages

The overall shortage is changeless from the hard currency shortage. However, shortage is calculated to be the largest by the domestic gross and adoption from private gross revenues which is now the primary pattern of accounting in Egypt ‘s budget.

Degrees of Government Expenditures and their ratio to Nominal GDP:

Year

2005

2006

2007

2008

2009

Outgos

161,611.0

207,811.0

212,104.0

241,552.0

340,370.4

Figure 8: Outgos

When it comes to outgos, it grew a batch and it remained a chief portion of the budget in Egypt. This is resulted from the continued strong enlargement ( from 2005 – 2008 ) of:

( 1 ) Public-sector rewards from the authorities.

( 2 ) Interest payments on the public debt stock are really high.

( 3 ) Costss of nutrient and energy increased.

Degrees of Revenues ( revenue enhancement plus non-tax ) and their ratio to Nominal GDP:

Year

2005

2006

2007

2008

2009

Grosss

110,864.0

151,266.0

172,153.0

184,729.0

275,700.0

Taxs

75,759.0

97,779.0

108,609.0

120,075.0

166,500.0

Figure 9: Revenues & A ; Taxes

On grosss side, entire grosss 110,864.0 in 2005 and it ‘s 275,700.0 in 2009. This addition came from the rise in revenue enhancement grosss that ‘s why it got affected. However, grosss have changed invariably ( about 21 % ) as a per centum of the GDP over the past old ages.

Monetary Indexs

Harmonizing to the Central Bank of Egypt few favourable conditions allowed the international grosss to roll up, this increased from US $ 20 billion in Fiscal year2005, to US $ 23 billion in Fiscal year2006, and to US $ 30 billion in financial year2007, which resulted in turning both wide money and reserve money.

When the World Global Financial Crisis rose, this resulted to do a set of financial pecuniary policy criterions led to face the reverberations that affect it harmonizing to the national economic system, which included the lessening of loaning and lodging rates by 1 % in the twelvemonth of 2009. Central Bank of Egypt is expected to cut down involvement rates in 2009, which resulted in small fright that the Egyptian Pound will deprecate from the reduced involvement rates.

Rate of Growth of Money Supply:

Harmonizing to CBE Money supply growing decreased by 9.38 % in 2009. However, harmonizing to the Annual growing in domestic recognition decreased, along with the lessening in growing in recognition for authorities. Growth in domestic recognition went down to 11.6 % over the same period.

Figure 10: Egyption Money SupplyCapital inflows bouncing will positively impact the money supply growing in the medium and short term. Credit growing will besides retrieve, nevertheless at a slow rate and the private sector will retrieve from the bead in 2009, and will go on enlargement in programs and the usage of stock list.

Rate of Inflation:

The epoch of rising prices begun in Egypt late, the state experiences showed that rising prices aiming is the best-way scheme for the pecuniary policy. However, the pecuniary policy seems to react more to the rising prices force per unit areas that are late go oning in Egypt, it seems that there is no primary rising prices rate and the CBE is taking determinations harmonizing the released rising prices rate.

Year

2005

2006

2007

2008

2009

Inflation

9.50 %

4.90 %

6.5 %

9.50 %

18.30 %

Beginning: hypertext transfer protocol: //www.indexmundi.com/egypt/inflation_rate_ ( consumer_prices ) .html

Figure 11: Inflation Rate

The followers are the entry of rising prices from 2005 to 2009, as you can see rising prices was in its highest extremum in 2009 with a rate of 18.30 % , and the lowest was on 2006 with a rate of 4.90 % .

International Indexs

Openness Index ( defined as imports plus exports as a ratio to GDP )

Figure 12: Imports, Exports and Trade

The undermentioned tabular array and graph explains the ratio of imports and exports of Egypt as a ration to GDP.

Figure 13: Graphed Imports, Exports and Trade

These are some of Egypt ‘s Exports and Imports:

EGYPT ( Alexandria )

Exports

Imports

A

grain

papyrus

painted clayware

linen/flax

glass vases

lotions/perfumes

( imported spices )

Piper nigrum

cinnamon

olibanum

ginger

Fe

vino

nuts / figs

As the graph and Numberss showed us, Egypt has a high degree of import and a lower rate of exports. The highest degree of Imports was on the twelvemonth of 2008 with a per centum of 43.72 % and the lowest is 2006 with 31.44 % . The highest degree of Exports was on 2008 with a per centum of 21.49 % , and the lowest was on 2006 with 16.458 % . The norm between imports and exports is in negative because the per centum of imports is much higher than the exports.

Degrees of Exports and rate of Growth of Exports

Year

2005

2006

2007

2008

2009

Merchandise Exports

30 %

30 %

30 %

33 %

25 %

Beginning: hypertext transfer protocol: //data.worldbank.org/indicator/NE.EXP.GNFS.ZS

Figure 14: Merchandise Exports

Egypt ‘s economic system depends a batch on the exportation of oil, which is one of the basic income beginnings from foreign income, along with the touristry grosss. Egypt has to import most of its nutrient, equipment and trade goods because both industrial and agricultural sector are non good developed in Egypt. Other than the export of oil and gasoline, Egypt besides exports cotton, fabrics, chemicals and metal merchandises.

Harmonizing to statistics, Europe and the USA are the most exporting markets for Egyptian oil and the other merchandises. However, the largest portion of Egyptian oil exportation is Italy which is 9.4 % of the entire volume.

Degrees of Imports and rate of Growth of Imports

Year

2005

2006

2007

2008

2009

Merchandise Imports

33 %

32 %

35 %

39 %

32 %

Beginning: hypertext transfer protocol: //data.worldbank.org/indicator/NE.IMP.GNFS.ZS

Figure 15: Merchandise Imports

In 2008 Egypt had the highest degree of importing in 2008 which had a per centum of 39 % , and the lowest rate was on the old ages 2006 and 2009.

Degree of Foreign Exchange Militias

Foreign exchange militias are besides called Forex militias ; nevertheless, they are merely the foreign currency sedimentations which are under the pecuniary governments and cardinal Bankss.

The lb depreciated against the US dollar in FY 2004 and most of FY 2005. However, in 2006 and the terminal of 2007 the lb raised to EGP 5.69 per USD. It was expected that the lb will maintain appreciating on the short term, giver that the oil and gasoline monetary values and weakening of the economic system of the US, the affect of the planetary economic crisis that happened in 2008 resulted that foreign investors to travel out from the Egypt stock market so the dollar exchange increased against the Egyptian lb which resulted in bankruptcy. However, as the foreign investors exited, the dollar exchange rate was against the Egyptian lb and it declined in 2008.

Critical Problems Facing Egypt

Most of the concern companies were affected negatively by the 25th of January 2011 event, because they were forced to shut their mills during the rebellion clip, and shortly after it for more than one hebdomad which caused them to a lessening in their production rate. They had troubles in transporting the produced merchandises to the spreading centres, and transporting the natural stuffs from seaports. The workers besides had troubles in transporting from to the mills, and from them. Businesss besides faced two critical jobs which are the employee ‘s work stoppages and the deficit of safety steps in the fabrication company. You see, the violent scenes in Egypt remind markets excessively much of the 1979 Revolution in Iran when the geopolitical hazard doubled oil monetary values, and plunged planetary economic end product. Although Egypt is n’t a major oil manufacturer, market participants are acquiring jittery about the possible effects of political agitation with Egypt ‘s adjacent states, such as Jordan, Yemen, or Saudi Arabia. After all, the Middle East is the hub of oil production in the universe and struggle in the part could interrupt planetary oil supply.

Egypt ‘s economic system chiefly depends on Oil Exporting, and it ‘s the chief resource of foreign income along with touristry notes, and US fiscal & A ; military AIDSs. Most of its nutrient, trade goods, and tools are imported due to its narrow development in the agricultural and industrial country. In 2010 about 630,600 barrels of oil were produced mundane in Egypt, and 155,200 barrels are exported per twenty-four hours. Furthermore, as we know that Egypt is responsible of keeping the keys of the Suez Canal and the Suez-Mediterranean grapevine which are for transit of over 2 million barrels of oil to the remainder of the universe.

The headline rising prices rate was 15.8 % March 2008, and the overall monetary value of nutrient rising prices rate was 23.7 % . Furthermore, in 2008 in urban countries, the rising prices rate became 16.4 % while nutrient monetary value rising prices rate was 22.0 % so it decreased by a batch. In 2009, it was said that Egypt was afraid that the return of 500,000 Egyptian labourers that are working in the Gulf.

Future Prospects

It is expected that about 70 % of gas exports will be delivered in the signifier of liquified natural gas by a ship to Europe and the United States. Furthermore, it is besides said that Egypt, Jordan and Syria made an understanding to widen this grapevine to Syria, which will do a manner for future connexions with Lebanon, Turkey and Cyprus in 2011. The market of the mortgage under procedure of development in Egypt, and foreign still are non able to do mortgages on their belongingss in Egypt. So in the hereafter, there will be a new mortgage jurisprudence that will let them to take loans. This will be unfastened in the close hereafter which will make a immense development in existent estate activity.

Economic Predictions:

Looking at Egypt in the following 40 old ages, there is a high potency that it will hold a really high dependence ratio. This will ensue strive upon the economic system activity sector, and the economic system will non be every bit successful as money demands to utilize so that it can care for dependants. Egypt is anticipating an aging population and the revenue enhancement remunerators will be needed to pay for their attention and pensions finally, which will go a job as the revenue enhancements will increase when there are more aged people in the population. Then it ‘s expected in 2050 that possibly there will be worsening in the birthrate rate.

Political Predictions:

In the hereafter Egypt will be more urbanised because of the industrialisation, and as a consequence the

Government will necessitate to repair and form the metropoliss, particularly Cairo, in order to suit more people. For illustration: Extending H2O and electricity lines and Building sewerage systems and edifice good flats for low income workers.

Decision

In decision, Egypt is the most popular state in the Arab universe, and more than 80 million people live in Cairo, and along that Egypt has the key to the Suez Canal, so its economic system will fundamentally impact most of the Arab states and most of the universe ‘s states that export oil from Egypt. The economic squad should simplify and cut down duties and revenue enhancements to better the transparence of the international budget and to implement the economic statute law to promote economic growing and to better Egypt ‘s fight. As we saw, the GDP growing rate in Egypt ‘s economic system was increasing-to-slightly-constant rate between 2005 and 2008, but so it dropped below 5 % because of the planetary economic crisis. On the other manus of Egypt ‘s growing, the economic system is still non stable because of the authorities ‘s intercession aside for nutrient lodging and energy and the public payments we talked about earlier. Energy should be limited for the Egypt and they should diminish the exportation because natural resources are non everlastingly, and for Egypt oil is one of its largest resources for income. To hold a growing in the economic system of Egypt, in my sentiment the authorities should concentrate on the touristry and Suez Canal grosss. To reason about the economic crisis and what it has done to the economic system of Egypt, we can eventually state that the one-year grosss fell aggressively, and they started to retrieve in the terminal of 2009, and the autumn of grosss in the Canal traffic and its grosss was one of the grounds that the oil monetary value has raised internationally.

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