Economy of Egypt

(wikipedia.org)
Updated: 2009-08-24 11:17

Egypt's economy depends mainly on agriculture, media, petroleum exports, and tourism; there are also more than three million Egyptians working abroad, mainly in Saudi Arabia, the Persian Gulf and Europe. The completion of the Aswan High Dam in 1970 and the resultant Lake Nasser have altered the time-honored place of the Nile River in the agriculture and ecology of Egypt. A rapidly-growing population, limited arable land, and dependence on the Nile all continue to overtax resources and stress the economy.

Cairo's city centre is a busy economic hub

The government has struggled to prepare the economy for the new millennium through economic reform and massive investments in communications and physical infrastructure. Egypt has been receiving US foreign aid (since 1979, an average of $2.2 billion per year) and is the third-largest recipient of such funds from the United States following the Iraq war. Its main revenues however come from tourism as well as traffic that goes through the Suez Canal.

Egypt has a developed energy market based on coal, oil, natural gas, and hydro power. Substantial coal deposits are in the north-east Sinai, and are mined at the rate of about 600,000 tonnes (590,000 LT; 660,000 ST) per year. Oil and gas are produced in the western desert regions, the Gulf of Suez, and the Nile Delta. Egypt has huge reserves of gas, estimated at 1,940 cubic kilometres, and LNG is exported to many countries.

Economic conditions have started to improve considerably after a period of stagnation from the adoption of more liberal economic policies by the government, as well as increased revenues from tourism and a booming stock market. In its annual report, the IMF has rated Egypt as one of the top countries in the world undertaking economic reforms.[citation needed] Some major economic reforms taken by the new government since 2003 include a dramatic slashing of customs and tariffs. A new taxation law implemented in 2005 decreased corporate taxes from 40% to the current 20%, resulting in a stated 100% increase in tax revenue by the year 2006.

FDI (Foreign Direct Investment) into Egypt has increased considerably in the past few years due to the recent economic liberalization measures taken by minister of investment Mahmoud Mohieddin, exceeding $6 billion in 2006.

Although one of the main obstacles still facing the Egyptian economy is the trickle down of the wealth to the average population, many Egyptians criticize their government for higher prices of basic goods while their standards of living or purchasing power remains relatively stagnant.

The best known examples of Egyptian companies that have expanded regionally and globally are the Orascom Group and Raya. The IT sector has been expanding rapidly in the past few years, with many new start-ups conducting outsourcing business to North America and Europe, operating with companies such as Microsoft, Oracle and other major corporations, as well as numerous SME's. Some of these companies are the Xceed Contact Center, Raya Contact Center, E Group Connections and C3 along with other start ups in that country. The sector has been stimulated by new Egyptian entrepreneurs trying to capitalize on their country's huge potential in the sector, as well as constant government encouragement.