Political Stability, Austerity Measures, External Imbalance, and Debt Impact on the Egyptian Economy

Abstract

Economic difficulties manifested by the low GDP per capita, high unemployment, high rates of inflation, limited sources of foreign currency, mounting internal and external debts, and high subsidies have been facing Egypt for a long time. Despite the higher growth rates in Egypt in the first decade of the millennium, the persisting economic difficulties and political instability problems led to the 2011 uprising. Against expectations, the political instability, security issues, and unrest, which followed the uprising, and the world economic difficulties led to further deepening of the economic problems of Egypt due to the reduction in the limited sources of foreign currency and fragile economic structure. Egyptian dependence on income from remittances, the Suez Canal, and tourism as the main sources of foreign currency are inadequate. Egypt should diversify its economic activities by further engagements in the services sector, direct more effort to technological advances, and increase the added value to its products by empowering the large youth and educated population.