Gross Domestic Product per Capita
This economic term refers to the overall national output of a country divided by the total number of people in the country. This is expressed in US dollars for every person for the year for which the data used is published. The gross national product per capita of Egypt has increased exponentially over the years since 1990. The graph below shows the data for gross domestic product per capita since the year 2004.
Economic growth
The economic growth of a country is measured through the consideration of many factors. The economy of a country also takes many forms inspired by the ideals of political leadership. Back in the 1960when Gamal Abdel Nasser was president of Egypt, the country’s economy was highly centralized. This has changed significantly with the subsequent presidents. Since the revolution that occurred and occasioned the ousting of President Hosni Mubbarak from power, the economy of Egypt has been bleeding immensely. The situation of the country’s economy has gotten worse since Morsi took over the reins of power.
Economic analysts however believe that that the departure of Morsi from the government will be followed by economic growth. This prime location of the country makes it an export base to Africa, Europe and economies in Asia. The country also has a large and low-cost labor force with a lot of productivity. Owing to this, economic analysts forecast that there will be increased economic growth. However, this is dependent on economic reforms, especially in the labor market. The following is a graphic presentation of protracted economic growth of the country:
Inflation
The level of inflation in Egypt is pressurizing the incumbent government. The rise in inflation has occasioned the increase in food prices. This has a lot of significance to the economy of the country. The incumbent government in the process of finalizing a 4.8 billion dollar loan from the International Monetary Fund that has stalled for a long time. The rising food prices occasioned by inflation are putting pressure in this process. In the year 2011, the inflation levels in the country were at 10.2%.
However, due to the fiscal policies of the central bank and the government, the rate of inflation decreased to 8.5% in the following year. The political turmoil the country has been experiencing has not done the economy well. Consequently, the rate of inflation as at December of 2012 shot to 12.9% this is higher than the two previous years. The level of inflation is expected to rise with increases in prices of some consumer products scheduled. For instance, the price of electricity is set to increase. Although many households will still benefit from subsidies, the cost of production in industrial units will increase and the extra cost will be passed on to the consumer through increased prices on consumer goods.
Export-Import
Any growth in the economy of Egypt is occasioned by export trade. The country’s economy is heavily reliant on the export of oil to other countries. The export of oil to other countries earns the country foreign exchange. This is very important to the country’s bilateral and multilateral trade efforts. Other sources of foreign exchange for the economy include tourism, military and financial aid from the Unites States of America. Since the revolution, the export trade has experienced a downturn. Due to the rising insecurity, there is decreased traffic of tourists.
This has resulted in a shortage of foreign currency in the economy. Despite the flow of the Gulf Arab Assistance, the problem of foreign exchange in Egypt has persisted. Businesses in the country have consequently resulted to the black market for the all necessary foreign exchange. On the flipside, the country has to import many of the commodities and equipment used in the economy. Additionally, the country has to import food stuffs from other countries. This is because the industrial and agricultural sectors of the country are not well developed. Economic analysts forecast increased export business because of increased confidence in the sector. This is because of the 1.5 billion dollars in arrears paid to an oil firm.
Balance of payment
The balance of payments is an indicator of international transactions involving services, goods and money. The balance of payments deficit in the country dropped remarkably in 2012 when compared to 2011. The balance of payments deficit in the year 2011 was at eight billion dollars. In the following year, the balance of payments reduced dramatically to 551.5 million dollars. The dramatic decrease in the balance of payments deficits was attributed to a surged in investment portfolios and remittances. The balance of payments deficits are forecast t increase from the 551.5 million dollars reported in the year 2012. This is because of the widening fiscal deficits that surpassed the budgeted for in the country’s annual budget.
Exchange rate
The Egyptian currency is called the Egyptian pound. One Egyptian pound is equivalent to 0.15 US dollars.
The exchange rate between the US dollar and the Egyptian pound keep fluctuating depending on the conditions in the economic market. Since the year 2009, the exchange rate for the Egyptian pound has decreased. In 2009, the exchange rate was at 0.18. This is much lower compared to the 0.15 reported in 2013.
Main trading partners
The recent revolution in Egypt has significant changes not only in the political arena but also in the economic realms. Presently, the economy of the country is inclined towards Eastern Europe and Soviet Union. Egypt has had very many trading partners. Before 1952, the main trading partner of Egypt was Britain. In the following years, the country had changed its trading partners to incorporate other economies in different trading blocks. By 1970, the percentage of exports from Egypt to Eastern Europe and the Soviet Union had increased from 20 percent in 1955 to over 60 percent in 1970. The trade between Egypt and the two trading blocs was two way. There was also an increase import from the Soviet Union to Egypt.
The percentage of imports from the Soviet Union increased to thirty three percent from seven percent between 1955 and 1970. There is also increased trade between Egypt and the European Union. This was occasioned by the Association Agreement of 2004 that improved the trade conditions. The bilateral trade since this agreement has increased twofold. Its highest level was experienced in 2012 where the trade accounted for 23.8 billion Euros. This marked an increase for 11.5 billion Euros in 2004 before the Association Agreement was enforced. The following is a graphical representation of the major trading partners of Egypt.
Works cited
Cooper, Mark. The Transformation of Egypt. Baltimore. Johns Hopkins University Press. 2013. Print.
Economic Intelligence Unit. Egypt. Available at> http://country.eiu.com/Egypt
