Economy of Egypt

The economy of Egypt used to be a highly centralized economy, focused on import substitution under president Gamal Abdel Nasser (1954-1970). During the rule of president Abdel Fattah el-Sisi (2014-present), the economy follows Egypt's 2030 Vision. The policy is aimed at diversifying Egypt's economy. The country's economy is the second largest in Africa by nominal GDP, and 38th in worldwide ranking as of 2023. Since the 2000s, the pace of structural reforms (including fiscal and monetary policies, taxation, privatization and new business legislation) helped Egypt move towards a more market-oriented economy and prompted increased foreign investment. The reforms and policies have strengthened macroeconomic annual growth results. As Egypt's economy healed, other prominent issues like unemployment and poverty began to decline significantly. The country benefits from political stability; its proximity to Europe, and increased exports. From an investor perspective, Egypt is stable and well-supported by external stakeholders.

Top Sectors in Egypt

Automobiles manufacturing in Egypt

El Nasr Automotive Manufacturing Company is Egypt's state owned automobile company, founded in 1960 in Helwan, Egypt. Established in 1962, the company manufactures various vehicles under license from Zastava Automobili, Daimler AG, Kia, and Peugeot. Their current lineup consists of the Jeep Cherokee; the open-top, Wrangler-based Jeep AAV TJL; the Kia Spectra; the Peugeot 405; and the Peugeot 406. Other automobile manufacturers in Egypt include Arab American Vehicles, Egy-Tech Engineering, Ghabbour Group, WAMCO (Watania Automotive Manufacturing Company) and MCV. MCV was established in 1994 to represent Mercedes-Benz in the commercial vehicle sector in Egypt, producing a range of buses and trucks for domestic sale and for export throughout the Arab World, Africa, Latin America and Eastern Europe. The manufacturing plant in El Salheya employs c. 2500 people.

Chemicals in Egypt

Abu Qir Fertilizers Company is one of the largest producers of nitrogen fertilizers in Egypt and the MENA region. It accounts for nearly 50% of all nitrogen fertilizer production in Egypt. The company was established in 1976 with the construction of its first ammonia urea production facility, located in Abu Qir, 20 kilometers east of Alexandria. Egypt Basic Industries Corporation (EBIC) is also one of the largest producers of ammonia in the country.

Consumer electronics and home appliances in Egypt

Olympic Group is the largest Egyptian company in the field of domestic appliances. The company mainly manufactures washing machines, air conditioners, refrigerators, electric water heaters and gas cookers. Bahgat Group is a leading company in the fields of electronics, home appliances, furniture and real estate. It also owns TV stations. The group is composed of the following companies: Egy Aircon, International Electronics Products, Electrical Home appliances, General Electronics and Trading, Goldi Trading, Goldi Servicing, Egy Medical, Egyptian Plastic Industry, Egy House, Egy Speakers, Egy Marble, Dreamland and Dream TV.

Textiles and clothing in Egypt

Textiles and clothing is one of the largest manufacturing and exporting processes in the country and a huge employment absorber. The Egyptian apparel industry is attractive for two reasons. Firstly, its proximity to European markets, whose rapidly changing fashions require quick replenishment. Egypt's geographical proximity to style-conscious Europe is a logistical advantage. Secondly, the production of garments is a low-capital and high-labor-intensive industry, and the local population of 66 million provides a ready workforce as well as a natural local consumer market that acts as a springboard for exports. The textile industry contributes with one quarter of Egypt's non-oil export proceeds, with Cotton textiles comprising the bulk of Egypt's TC export basket. The public sector accounts for 90% of cotton spinning, 60% of fabric production and 30% of apparel production in Egypt. Misr Fine Spinning and Weaving is the largest enterprise of its kind in Africa and the Middle East. The private sector apparel industry is one of the most dynamic manufacturing processes in Egypt.

Energy in Egypt

Egypt suffered blackouts during the summer of 2014 that lasted for up to six hours per day. A rapid series of reforms cut energy subsidies, and Egypt quickly developed the Zohr gas field in the Mediterranean, which was discovered in 2015. The country now has an oversupply of electricity and aims to source 20% of its electricity from renewables by 2022 and 55% by 2050. Egypt and Cyprus are considering implementing the proposed EuroAfrica Interconnector project. This consists of laying a 2 Gw HVDC undersea power cable between them and between Cyprus and Greece, thus connecting Egypt to the greater European power grid. The interconnector will make Egypt an electricity hub between Europe and Africa.

Egypt - Key Economic Indicators

Exports and Imports

Egypt's major exports are petroleum products, fertilizers, and gold. Top import categories include refined petroleum, wheat, and machinery. While exports have been rising in recent years, they haven't kept pace with imports, resulting in a trade deficit.

Balance of Trade

Egypt runs a trade deficit, meaning the value of imports is higher than the value of exports. This deficit has been widening due to factors like the global rise in food prices.

Infrastructure Development

The Egyptian government is investing heavily in infrastructure projects, including expanding the national road network. This aims to improve connectivity, boost trade, and create jobs. While specific figures for total road length can be found on government websites, estimates suggest it's well over 30,000 kilo meters.

Fiscal Policy

The Egyptian government is working to reduce its budget deficit through a combination of increased tax collection and spending control. This is crucial to address challenges like high inflation.

Monetary Policy

The Central Bank of Egypt (CBE) has been raising interest rates to combat inflation, which reached a record high of 37.4% in August 2023. The CBE's actions aim to stabilize prices and protect the Egyptian pound.

Trade Agreements

Egypt has trade agreements with several countries and regional blocs, such as the European Union and the Arab Free Trade Area. These agreements aim to reduce trade barriers and increase trade flows, but their impact on the recent trade deficit is yet to be fully seen.

Environmental Regulations

Egypt faces environmental challenges like desertification and water scarcity. The government has introduced regulations to address these issues, promoting sustainable practices and protecting natural resources. The effectiveness of these regulations is an ongoing area of focus.

Tax System in Egypt

Capital gains tax: Egypt does not currently impose a separate capital gains tax. However, profits from the sale of certain assets, like stocks held for less than two years, may be subject to income tax.
Corporate tax rate: The standard corporate income tax rate in Egypt remains at 22.5% on net taxable profits as of May 2024. However, recent legislative changes (June 2023) aim to close tax loopholes and potentially affect corporate tax structures in the future.
Sales tax: Egypt's value-added tax (VAT) system applies a standard rate of 14%.
Property tax: Rates for property taxes in Egypt vary depending on location and property type. No major changes have been reported recently, but you can find the latest details on the Egyptian government websites.
Payroll tax: The social security system in Egypt is funded by contributions from both employers and employees. As of May 2024, the contribution rate for employees is typically around 20% of their salary, with employers contributing a similar amount.
Tax deductions and credits: Egypt offers various tax deductions and credits to incentivize specific activities or support certain demographics. These can include deductions for research and development, depreciation of assets, and exemptions for low-income earners. The specifics of these deductions and credits can change, so consulting with a tax professional is recommended for up-to-date information.
Tax compliance: The Egyptian government continues its efforts to improve tax compliance. Recent developments include the modernization of tax collection systems with the rollout of an Integrated Tax Core System in major tax offices (as of January 2024). This aims to enhance data collection and potentially lead to better tax enforcement.
Tax burden: The overall tax burden in Egypt remains moderate compared to some developed economies. However, with a budget deficit to address, the government might explore ways to increase tax revenue in the future.

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Provision for Seawater desalination plant project in the Suez Canal Economic Zone in partnership with the private sector

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