Egypt’s economy is recovering after policymakers launched ambitious and politically difficult reforms to remedy years of economic mismanagement. In November 2016, the currency was floated and the foreign exchange (FX) market was liberalised, eliminating the overvaluation and FX shortages; a three-year fiscal consolidation program was launched to reduce persistently high budget deficits; monetary policy was tightened to contain inflation pressures; and reforms were launched to address inefficient energy and food subsidies, strengthen social safety nets and improve the business climate. This has helped restore confidence in the economy and attract investment. IMF forecasts expect growth will reach 6% over the coming years.
Indeed, GDP growth significantly exceeded forecasts to reach 5.3% in 2018 driven by significant export and investment growth, as well as increasing oil prices. GDP per capita rose 4% p.a. between 2010 and 2016. GDP per capita has seen a large drop owing to the depreciation of the Egyptian pound in 2016 but should exceed previous levels if strong GDP growth continues. Stronger economic growth is expected to push per capita incomes toward US$4,000 over the next five years.