Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. In the last 30 years, the government has reformed the highly centralized economy it inherited from President Gamel Abdel NASSER. In 2005, Prime Minister Ahmed NAZIF's government reduced personal and corporate tax rates, reduced energy subsidies, and privatized several enterprises. The stock market boomed, and GDP grew about 5% per year in 2005-06, and topped 7% in 2007. Despite these achievements, the government has failed to raise living standards for the average Egyptian, and has had to continue providing subsidies for basic necessities. The subsidies have contributed to a sizeable budget deficit - roughly 7.5% of GDP in 2007 - and represent a significant drain on the economy.
Foreign direct investment has increased significantly in the past two years, but the NAZIF government will need to continue its aggressive pursuit of reforms in order to sustain the spike in investment and growth and begin to improve economic conditions for the broader population. Egypt's export sectors - particularly natural gas - have bright prospects.
Egypt’s GDP was $127.9 billion in 2007, with average growth of 7.1 %. Services account for the largest percentage of GDP (48 %), while industry accounts 38.1 % and agriculture – 13.8 %. The national unemployment rate stands at 9.1% (2007 est.). The inflation rate in Egypt was 9.5% in 2007. The country has a public debt of 105.8% of GDP, according to CIA World Factbook 2007 estimates.
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 U.S. 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 go through the Suez Canal.
According to Global travel industry news, Egypt’s first assistant tourism minister, confirmed the tourism sector comprises 11.3 percent of Egypt's gross domestic product (GDP) and 19.3 percent of the total investment made in foreign currencies. Egypt was in the lead of the Middle Eastern region, here 11.1 million tourists visited the country, as opposed to 9 million in 2006; marking a significant 22.1 percent increase. Consequently, and according to the Central Bank of Egypt, tourism revenues reached US$9.4 million in 2007.
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. Egyptians often blame the corruption as the main impediment to feeling the benefits of the newly attained wealth. The government promises major reconstruction of the country’s infrastructure.
Egypt is a member of the UN, OAU, the Arab League, OPEC and Organization of the Islamic Conference.
