Egypt: An Economic Outlook


Illustration by Farwa Rizwan for Al Arabiya News


A major grievance fueling Egyptian protests during the Arab Spring focused on economic deprivation, rising income inequality and the large number of unemployed, educated youth that comprise Egypt’s population.  With the unemployment rate hovering at 12.4 percent, Egypt’s new president Mohamed Morsi, is under intense pressure to right the economic ship by enacting policies that will not only address short-term needs but also lay the foundation for long-term growth.  

To jumpstart his economic plans, Morsi recently announced a public spending initiative that will build a base of public sector support, although this risks pushing inflation rates higher and diminishing the value of Egypt’s foreign currency reserves.  Critics also doubt whether Morsi’s choice for prime minister, Hesham Kandil, has the necessary experience to guide the country through this difficult transition.

From 2004 to 2008, Cairo aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth; however, the political changes emanating from Tahrir Square scared off potential investors, and along with the decline in tourism and manufacturing, propelled Egypt toward an economic breakdown.  

Sustainable economic development, however, is central to creating lasting political reform in Egypt and to establishing credibility for the newly elected Morsi and the Muslim Brotherhood’s Freedom and Justice Party (FJP).  With the spending initiative, Morsi aims to engage both the poor and influential by increasing social allowances, and in the process, gain the support of public institutions that historically supported the old regime and the Supreme Council of the Armed Forces (SCAF).

Mohamed Gouda, a member of the Freedom and Justice Party’s economic committee, echoed Morsi’s concern but also his desire to address these challenges.   “We can’t resolve Egypt’s economic problems in 100 days, and we are well aware that these are short-term measures,” he said.  “He (Morsi) wants to focus on the concerns of ordinary Egyptians to show that this is a president who is aware of their problems, and that this represents a new start.”

Ann

Diwaniyya Contributor

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