After South Africa, Egypt is the most industrialised country in Africa. Outside the major conurbations, agriculture, a sector in which every third Egyptian is employed, continues to play a major role. Instead of the produce typically associated with Egypt in former times such as millet, broad beans and cabbage, grown now are primarily cotton, rice, sugar cane, wheat, vegetables and fruit, which enjoy stronger demand on international markets. Egypt serves the European market in particular with fruit and vegetables on a seasonal basis; at the same time, it is heavily dependent on imported wheat. Agricultural land extends primarily along the Nile and in the Nile delta, but accounts for merely 2.9% of the country’s total area. Because of restrictive land parcelling, many farmers can practise only subsistence farming. Egypt must therefore import large quantities of foodstuffs – including several million tonnes of wheat, which is Egypt’s main import commodity. Optimising the irrigation system offers the only significant growth potential. Traditionally, the most important product is cotton.
Energy and commodities sector
The former main source of income, the export of fossil fuels (mineral/crude oil and natural gas), has practically dried up because of excess domestic demand. Declining oil and gas production volumes are up against an annual growth in demand of ca. 7% for electricity and a comparable rate for fuels. Despite an upgraded pipeline to Syria, Jordan and Lebanon, exports could not be increased. On the contrary, fuel is currently being imported. At the same time, oil reserves are estimated at 4.5 billion barrels. Egypt’s natural gas reserves are estimated at around 2,200 billion m³. The country thus accounts for 1.2% of the world’s natural gas deposits. In addition, Egypt has a number of economically exploitable and, in part, already accessible mineral commodities, including iron ore, phosphates, gypsum, gold and marble.
Manufacturing industry and construction
The oldest industries are the processing of cotton, sugar and other agricultural produce. Recent years have seen the emergence of cement, fertiliser, iron, steel and aluminium products, a chemical-pharmaceutical industry, crude oil refining, mechanical engineering and car manufacture. In view of a strongly growing population (+2.6% p.a.), there is considerable demand for infrastructure and housing construction. The building industry is thus one of the most important sectors in the Egyptian economy. The construction sector provides substantial growth stimulus. The same applies to manufacturing industry, which produces primarily for the local market and needs to continue investing considerably in the qualification of skilled workers. Egyptian manufacturers are nevertheless very successful in several niche markets and are currently integrated in supply chains in Europe.
The services sector employs a considerable portion of the workforce and accounts for a major part of the gross domestic product. Wholesale and retail in particular and, to an increasing extent, financial services play a significant role here. The services sector is closely tied to tourism. A significant part of the services sector works unofficially and is thus routinely not included in official statistics.
Egypt has been a well-established all-year-round travel destination for many years, but because of the difficult geopolitical situation is susceptible to strong fluctuations in this sector. Tourism is one of the most important economic sources of revenue for the country. As recently as 2010, 14.7 million tourists arrived, but in 2015 there were barely 10 million, ca. 10% of which came from Germany. This decline is due to the political upheavals from 2011 to 2013 and the, in part, armed conflicts in neighbouring Libya, Syria, Iraq and Sudan. In 2016, the number of tourists even fell to around 6 million – undoubtedly influenced by the tragic accidents of two charter planes. Early 2017 saw something of an upward trend in tourist numbers – grounds for cautious optimism.
The Suez Canal, which handles ca. 8% of world shipping trade, is at the same time one of the country’s important sources of foreign currency. Revenues are currently running at around USD 5.3 billion p.a. Based on the widening of the canal and the resulting increase in capacity, it is planned to increase income in the coming years step-by step to up to USD 13 billion p.a. This huge increase is to be achieved by means of doubling the number of ships passing through from currently ca. 49 to 97 per day. The necessary capacity since the mid-2015 widening of the canal is now in place. Here too it remains to be seen whether global trade and thus marine traffic will grow as anticipated.
The structural current account deficit has for a long time been compensated for by income from transit charges for passage through the Suez Canal and transfers from Egyptian s working abroad.
Some 7 million Egyptians are employed both directly and indirectly by the state – i.e., in state-owned companies (e.g., our parent companies, Banque Misr, National Bank of Egypt). This is equivalent to about one-quarter of all those legitimately employed. By handing out subsidies, particularly in the food and energy sectors, the state sector exercises direct influence over the functioning of the economy. Sources: Foreign Office, Austrian Economic Chambers, Wikipedia