The Egyptian economy has steadily expanded in recent years on the back of extensive reforms aimed at correcting macroeconomic imbalances, attracting investment and reducing the fiscal deficit. Indeed, the country’s GDP grew by 5.6% in 2019, up from 5.3% in 2018 and 4.1% in 2017, according to the IMF. The rate of expansion in 2019 outpaced Egypt’s North African counterparts: the national GDPs of Morocco, Tunisia and Algeria rose by 2.2%, 1% and 0.8%, respectively. Prior to the outbreak of Covid-19, this upward growth trend was expected to continue in 2020, with the Egyptian government targeting GDP growth of 5.9% that year.
Strong economic performance was reflected in the country’s foreign exchange reserves, which steadily ticked upwards from $24.3bn in December 2016 to $42.5bn in December 2018, $45.3bn in late October 2019 and $45.5bn in January 2020. Meanwhile, the current account deficit decreased from $20.5bn in 2016 to $10.2bn in 2019, while consumer price inflation eased from 23.5% in 2017 to 13.9% in 2019.
In July 2019 the IMF – in recognition of the reforms made since the currency crisis three years earlier – released the final $2bn of a $12bn loan agreed upon in November 2016. This move emphasised Egypt’s success in meeting its primary budget surplus target of 2% of GDP by FY 2018/19, as well as the positive effects of the reforms on economic stabilisation.
The Egyptian authorities were able to leverage this economic momentum to generate widespread and sustainable benefits for the broader society. The unemployment rate, for example, fell from 13.2% in 2013 to 9.8% in 2018. Moreover, efforts to formalise the workforce and enhance financial inclusion began to pay off, with the proportion of Egyptians aged 15 and over with a bank account rising substantially from 9.7% in 2011 to 14.1% in 2014 and 32.8% in 2017.
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