Egypt's economy is poised for future growth

Egypt's economy is growing strongly. (Photo: By Shutterstock).

The Egyptian economy achieved a growth rate of 4.4 per cent in the first quarter of 2023/22, despite world crises. It's expected to grow more. Ahmad Abdel-Rahman reports.

Hala Al-Saeed, Egypt's Minister of Planning and Economic Development, recently discussed the many crises facing the world from the COVID-19 pandemic to the Russian-Ukrainian war.

She recently participated in the Egyptian Economic Ministerial Committee session, within the activities of the Seventh Investors Conference in the Middle East and North Africa (MENA), held from January 30 to February 1.

During the session, Al-Saeed, spoke about the COVID-19 pandemic, high inflation and interest rates around the world. He also spoke about the geopolitical challenges in the world, primarily the Russian-Ukrainian war, which has shocked the food and energy, markets as well as an increasing prices.

Reasons for Egypt's strong economic performance

A growth rate of 6.6 per cent was achieved in the fiscal year 2021/2022 despite the challenges facing the world. Al-Saeed said. A growth rate of 4.4 per cent was recorded in the first quarter of the fiscal year 2022/23, she said, adding that the government expects a growth rate of between 4.8 per cent and 5 per cent during the current fiscal year.

She said this growth was driven by strong economic activity in tourism, communications and information technology, agriculture, logistics and retail services, as well as the Suez Canal.

El-Saeed also referred to the very strong performance of the tourism sector, pointing to the increase in the number of tourists by 55 per cent in the first quarter of the current fiscal year compared to only 40 per cent last year. She has said that the government is striving to maximise the potential of the sector as a major driver of growth. The revenues of the Suez Canal increased by about 30 per cent, she added.

Al-Saeed also stressed the importance of foreign direct investment (FDI) as a top priority for the government, emphasising its rise to more than 90 per cent of GDP in the past fiscal year. The Egyptian government expects that it will be among the countries with the strongest investment momentum in the region in 2023 and beyond.

This is important because the government follows a strategy of rationalising capital and operational expenditure, so that it achieves control of public finance and reduces pressure on foreign currencies, she said.

Al-Saeed continued that the past few years has witnessed an increase in public investment, saying it had accounted for more than 70 per cent of the total investments. The volume of public investments in 2021/2022 amounted to about EGP 933 billion, with a growth rate of 46 per cent compared to the previous year. The cumulative total of public investments during the period 2015 -2022 reached about 3.6 EGP trillion. This also emphasises its importance in restoring stability in the markets and modernising the deteriorating infrastructure, following a period of political and economic turmoil.

The government aims to double the role of the private sector in the economy to 65 per cent over the next three years, while maintaining GDP growth and enhancing the economy's long-term competitiveness, El-Saeed said. This is the main thrust of the structural reforms programme, which targets the real sector and developing the role of the private sector in the economy, , she added

The sectors that the government will focus on will include renewable energy, water desalination, health, communications, information technology and industry, as well as agriculture. There will also be incentives to strengthen foreign direct investment links with local sectors, which is expected to contribute to creating greater value in the economy.and enhancing its competitiveness

Egypt's sovereign wealth fund, which represents the investment arm of the government, acts as a reliable partner for private investors El-Saeed said. It is also working hard to unleash Egypt's potential as a gateway to Africa, by creating attractive investment products across a number of sectors, she said. These include renewable energy sources, green hydrogen, tourism, real estate, and logistics.

Egypt's sovereign wealth fund also wants to support a fair energy transition, noting that nine prominent framework agreements were signed during the Conference of the Parties (COP-27) in 2022 for the production of green hydrogen along with expected investments [in green energy]  amounting to about USD85 billion.

For example, other agreements have also been signed to establish renewable energy stations, and a green water desalination programme is being implemented to complement these efforts, she said.

Other agreements are expected to follow to take advantage of Egypt's natural and logistical resources, El-Saeed said.