Egypt

Egypt is located in the northeastern part of Africa and extends into Asia through the Sinai Peninsula. With an area of about 1,001,450 km², it is the 30th largest country in the world by surface area. To the north, it is bordered by the Mediterranean Sea, to the east by Israel and the Gaza Strip, and to the south by Sudan and Libya. As of January 1, 2023, Egypt’s population is 104 million, with significant population growth. The capital, Cairo, is the most populous city with over 9 million inhabitants, and the metropolitan area has a population of 20 million. Other major cities include Alexandria, Giza, and Luxor.

Economic Situation

In 2023, Egypt’s GDP is estimated at 486 billion dollars, with a growth rate of 5.5% compared to the previous year. The GDP per capita is 4,700 dollars. In 2023, exports amounted to 40 billion dollars, while imports totaled 80 billion dollars, resulting in a trade deficit of 40 billion dollars. Exports increased by 4% compared to the previous year, while imports grew by 5%. The balance of payments recorded a deficit of 10 billion dollars in 2023, improving from the 12 billion deficits in 2022. The public deficit for 2023 was estimated at 7 billion dollars, 1.5% of GDP. Public debt reached 230 billion dollars by December 31, 2023, equivalent to 55% of GDP.

In the currency market, the average exchange rate in 2023 was 30.5 EGP per USD. The inflation rate in December 2023 was 25.8%, due to rising food and energy prices. The unemployment rate in December 2023 was 9%, with youth unemployment (15-24 years old) at 17%. The average gross monthly salary in 2023 was 1,000 EGP (about 33 USD). The legal minimum wage was set at 3,000 EGP per month in 2023. 30% of the Egyptian population lives below the poverty line.

Forecasts

Estimates for 2024 suggest economic growth of 6%, with GDP expected to increase by 6.5% in 2025. Inflation is expected to decrease to 20% in 2024 and 15% in 2025. The Egyptian economy will benefit from foreign investments, particularly in the energy and tourism sectors, but it will face challenges related to political stability and economic reforms.

Country Risk

Egypt presents a high-country risk due to its political instability, economic vulnerability, and dependence on foreign funding sources. However, it has maintained relative stability with financial support from allies such as the United States and Gulf countries.

Foreign Direct Investments

In 2022, FDI in Egypt reached 9 billion dollars, concentrated in the energy, infrastructure, and technology sectors. The main investors come from the United Arab Emirates, Saudi Arabia, and the United States. Egypt is working to attract investments, particularly in renewable energy and digitalization.

Geopolitical Analysis

Strategic Role in the Middle East and Africa

Egypt, due to its geographical location and history, plays a crucial role in Middle Eastern and African geopolitics. The Suez Canal, which connects the Mediterranean Sea to the Red Sea, is one of the most important maritime routes globally, essential for global trade. This location gives Egypt strategic influence in international relations and the global economy, especially in the energy and maritime sectors.

Relations with Regional and Global Powers

Egypt maintains long-standing relations with several regional powers, including Saudi Arabia and the United Arab Emirates, which support President al-Sisi’s government with economic and military aid. However, relations with Turkey and Qatar remain tense due to ideological and political differences. Globally, the United States continues to be one of Egypt’s main allies, providing military and financial assistance, although relations have been influenced by concerns over human rights.

Internal Political and Social Challenges

Egypt faces significant internal challenges, including political instability and social tensions. Protests against the government and demands for political reforms are common, but the regime has adopted a hardline stance against dissent. Growing economic inequality and poverty are additional sources of instability, fueling discontent, particularly among the youth.

Environmental Issues and Food Security

Egypt also faces significant environmental challenges, including water scarcity and desertification. The Nile River, crucial for agriculture and water supply, is under pressure due to upstream water policies from countries like Ethiopia, particularly with the construction of the Grand Ethiopian Renaissance Dam. This situation could generate regional tensions, making cooperation on water resource management a strategic priority.

Relations with China and Infrastructure Investments

In recent years, Egypt has strengthened its cooperation with China, attracting significant investments in infrastructure and technology. The Chinese “Belt and Road” initiative has led to important projects in Egypt, contributing to improvements in the country’s infrastructure but raising concerns about growing debt and economic dependency on Beijing.