Egypt, a gateway between Africa, Europe, and the Middle East, boasts a diverse and rapidly evolving economy. Its gross domestic product (GDP) reflects significant contributions from various sectors. Due to its strategic geographic location, rich history, and abundant natural resources, the country has emerged as a major economic hub in the MENA region.
Egypt’s key contributors to its GDP include its energy sector, the Suez Canal, construction and infrastructure development, and its tourism industry. In addition, the agricultural and manufacturing sectors remain vital for employment and domestic production.
Egypt is the region’s most populous country, with around 112.7 million people, twice as many as the six GCC states combined. The country’s large domestic market is key in attracting foreign and domestic investments.
Key sectors driving Egypt’s economic growth
Several sectors contribute to the growth of Egypt’s GDP, including the oil and gas, tourism, agriculture, manufacturing, and construction sectors. The Suez Canal is also a major source of income for Egypt. These sectors contribute significantly to the total value of final goods and services produced in the country, which is a key component of Egypt’s GDP.
Oil and gas
Egypt’s oil and gas industry is a major backbone of the country’s economic prosperity. According to Mordor Intelligence, the industry’s market size was estimated at $7.48 billion in 2024 and is expected to reach $8.68 billion by 2029. The oil and gas market witnessed robust growth primarily due to Egypt’s favorable government policies and high production rate, making it one of the largest natural gas producers in Africa.
According to the Energy Institute Statistical Review of World Energy 2023, natural gas production in Egypt reached 64.5 billion cubic meters in 2022. In addition, Egypt had approximately 3.3 billion barrels of crude oil reserves and 2.209 trillion cubic meters of natural gas as of 2021.
In December 2022, the Petroleum and Mineral Resources Ministry in Egypt announced a total investment of $2.1 billion in oil and natural gas exploration plans until 2025, further supporting the sector’s growth and its contributions to the economy.
Tourism
Egypt’s tourism sector is one of the prominent sectors driving economic growth. Tourism revenues reached a record high of $15 billion in 2023, surpassing the previous records of $12.5 billion in 2010 and $13 billion in 2019, before the COVID-19 pandemic.
Egypt welcomed a record number of 14.9 million international tourists in 2023, exceeding the peak year of 2010, which saw the arrival of 14.7 million tourists, and the pre-pandemic year of 2019, which saw 12.9 million tourists.
Egypt’s tourism sector revenues increased 5 percent to $6.6 billion during the first half of 2024. Data from the Ministry of Tourism and Antiquities revealed that between January and June 2024, Egypt welcomed 7.069 million tourists, exceeding its previous record-high of 7.062 million during the same period last year.
The World Travel and Tourism Council (WTTC) expects Egypt’s tourism sector to expand its contribution to the national GDP to nearly $19.58 billion in 2024, constituting 8.1 percent of Egypt’s economy.
Agriculture
The agricultural sector is a key driver of Egypt’s GDP growth, contributing 11.6 percent to the national economy. According to the Ministry of Planning and Economic Development, government investments in the sector have surpassed $1.64 billion, with a projected $2.31 billion allocated for the fiscal year 2023-2024. The aim is to boost agricultural output to $48.16 billion, representing a 20 percent growth.
Agriculture is a critical economic pillar, employing 18.1 percent of Egypt’s workforce. According to a report by Entlaq, Egypt’s agricultural exports are projected to hit $14 billion and create over 50,000 new jobs by 2030. However, the sector faces major challenges like water scarcity and climate change.
Manufacturing
According to Oxford Business Group, Egypt’s industry and manufacturing sectors account for around 15 percent of the total GDP. It plays a prominent role in the country’s economic development agenda, which emphasizes innovation, sustainability and enhanced ties with the African continent. The World Bank reveals that Egypt led African countries in the value of manufacturing output, reaching $59.6 billion in 2023 despite a 21 percent drop from 2022.
Construction
Egypt’s construction industry, the largest in Africa and third largest in the MENA region, is projected to grow at a compound annual growth rate of more than 8 percent until 2029, according to JLL’s construction market intelligence report.
Egypt holds 12 percent, or $515 billion, of the MENA’s unawarded project pipeline, which is expected to hit $3.90 trillion. This ranks third in the region after Saudi Arabia and the UAE. The value of residential projects in Egypt amounted to around $36 billion, while mixed-use projects in the country totaled $115 billion.
Cairo’s residential sector alone added over 7,000 units during the first quarter of 2024, with significant price increases in areas like 6th October and New Cairo.
Suez Canal
The Suez Canal is another major source of income for Egypt. In the last year, however, the Suez Canal suffered a loss of more than 50 to 60 percent of its income due to regional disturbances and tensions.
Earlier this year, Osama Rabie, the chairman of the Suez Canal Authority, said that the Suez Canal expects substantial revenues reaching $9 billion in the fiscal year 2024-2025. This target is near the canal’s record revenue of $9.4 billion in the fiscal year 2022-2023 before tensions in the Red Sea erupted.
Egypt’s GDP trends
Egypt’s real annual economic growth rate reached approximately 3.8 percent in the fiscal year 2022-2023, revealed Dr. Hala El-Said, Minister of Planning and Economic Development. The government’s target for fiscal year 2023-2024 is 4.2 percent.
Egypt’s GDP in 2022-2023 amounted to EGP10.2 trillion ($202.18 billion) at current prices, with a target of reaching EGP9.2 trillion ($182.36 billion) in the current financial year. Growth was propelled by private consumption and exports, despite high inflation. At 24.8 percent in 2022-2023, inflation was well above the Central Bank of Egypt’s (CBE) target of 7 percent, driven by rising international prices, domestic supply shocks, and exchange rate movements.
The Egyptian pound lost 70 percent of its value against the U.S. dollar between May 2022 and January 2023. To curb inflationary pressures, the central bank increased interest rates three times between March and August 2023. Foreign direct investment (FDI) flows hit $10 billion in 2022-2023, marking a 12.8 percent increase compared to the previous financial year.
Egypt’s GDP grows 2.4 percent in 2023-2024
Egypt’s gross domestic product (GDP) growth rate was 2.4 percent in the fourth quarter of the 2023-2024 year, bringing the annual growth rate to 2.4 percent, down from 3.8 percent a year earlier. The planning ministry attributed the slowdown to ongoing geopolitical tensions, global economic uncertainty, and the government’s contractionary policies.
This was offset by positive growth in select sectors, including communications and information technology, tourism, wholesale and retail trade, transport and storage, and social services such as education and health, which partially offset the slowdown in economic activity in other key sectors.
Net FDI inflows into Egypt reached a record $46.1 billion in 2023-2024, a significant increase from $10 billion in the prior financial year.
Latest economic figures signal positive growth
Egypt’s external debt has decreased by over $15 billion in just six months, a testament to the government’s reform initiatives, as Prime Minister Mostafa Madbouly announced. GDP figures in national currency are converted into U.S. dollars using market exchange rates to provide a clearer picture of economic performance. During a discussion with several leading intellectuals on urgent national and international matters, Madbouly shared that Egypt’s external debt stood at $168 billion in December 2023 but fell to $152.8 billion by June 2024. He also emphasized the government’s commitment to managing inflation, aiming for rates below 10 percent by the end of 2025.
The latest report from the Central Bank of Egypt (CBE) indicated that net FDI inflows in the non-oil sector rose to $46.4 billion, bolstered by the $35 billion Ras-El Hekma deal. Additionally, FDI in Egypt’s oil sector increased slightly to $5.7 billion, up from $5.6 billion in the previous financial year.
Egypt’s annual urban consumer price inflation rate declined to 25.5 percent in November, its lowest since December 2022, according to the latest data from the Central Agency for Public Mobilization and Statistics (CAPMAS). Month-on-month, headline inflation rose by 0.5 percent in November, down from 1.1 percent in October, mainly due to a 2.8 percent decline in food prices.
Headline inflation climbed to a record high of 38 percent in September 2023 after falling to 26.5 percent in October. Inflation in Egypt began rising in early 2022 following Russia’s invasion of Ukraine, which prompted foreign investors to withdraw billions of dollars from Egyptian treasury markets.
Interest rates remain high
Earlier this month, Egypt’s central bank kept its overnight interest rates unchanged. “Considering developments at the domestic and global levels, the committee views the current monetary policy stance as appropriate until a significant and sustained decline in inflation materializes,” said the central bank.
The Central Bank of Egypt’s Monetary Policy Committee (MPC) decided to keep the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 27.25 percent, 28.25 percent, and 27.75 percent, respectively. The committee also kept the discount rate unchanged at 27.75 percent. The decision reflects recent developments and outlook at the global and domestic levels since the previous MPC meeting.
Leading indicators for Q3 of 2024 pointed to Egypt’s real GDP growing faster than the 2.4 percent growth in Q2 2024. Egypt’s central bank expects economic activity to continue rising. However, it noted that estimates indicate that real GDP remains below potential. The total value of all final goods and services produced within the country is a crucial measure of GDP.
Looking ahead, Egypt’s central bank expects inflation to persist near current levels until the end of 2024, with the balance of risks still tilted to the upside. These risks include geopolitical tensions, possible trade protectionism, and higher-than-anticipated pass-through of fiscal measures. Nevertheless, inflation is projected to ease starting Q1 of 2025 as the cumulative impact of monetary policy tightening and favorable base effect materializes.
Egypt’s real GDP to grow 4.1 percent next year
In its latest World Economic Outlook report, the IMF predicted that Egypt’s economy would grow 4.1 percent in 2025.
Regarding inflation, consumer price inflation in Egypt recorded 24.4 percent in 2023-2024, with the IMF projecting it to rise to 33.3 percent in 2024-2025. Following this peak, the IMF forecasts a decrease in inflation by 12.1 percent, bringing it to 21.2 percent in 2025-2026.
UAE’s investments in Egypt propel economic growth
The UAE’s investments in Egypt, particularly the Ras El Hekma land deal this year, have been a turning point in its economy. Egypt’s privatization agenda had some successes in 2023, but it only managed to sell a fraction of the 32 assets on its initial list. The largest deals were with the UAE, including $800 million of investments by Abu Dhabi sovereign wealth fund ADQ in three industrial companies and a $625 million investment in Eastern Tobacco by another UAE investment vehicle.
In February 2024, the UAE announced it would invest $35 billion in Egypt, an order of magnitude higher than any previous deals. The core of this investment was $24 billion in new funding to buy the rights to develop Ras El-Hekma, a peninsula on the Mediterranean coast west of Alexandria.
In addition, the UAE converted the $11 billion of deposits it held with the Egyptian central bank from two rounds of coordinated GCC support in 2014 and 2020 into local currency to use for investment. This immediately boosted foreign reserves, public finances and international confidence in Egypt.
The deal’s momentum enabled Egypt to liberalize its currency in March, with the pound immediately dropping by over a third.
World Bank and multilateral banks support recovery
The UAE’s investment, along with other reforms, was welcomed by the IMF, which enabled it to complete the stalled reviews of the Extended Fund Facility and boost the funding arrangement from $3 billion to $8 billion. Additional funding was also unlocked from other multilaterals, including $8 billion from the European Union and $6 billion from the World Bank.
Egypt’s macroeconomic indicators have improved, with the primary fiscal surplus more than tripling to $18 billion (about 6 percent of GDP) for the fiscal year that ended in June. Inflation has also declined every month since the deal was announced. Foreign exchange reserves increased to $46 billion in July, a record level and nearly a third more than in February.
Egypt’s GDP per capita
Egypt, classified as a lower middle-income country by the World Bank, had a GDP per capita of $3,512.6 in fiscal year 2023 (July 2022-June 2023). In 2024, this number rose to $3,540.
Egypt’s GDP per capita crossed the $3,000 mark in 2011 and has fluctuated at that level since. However, in 2017, the country’s GDP per capita fell to a low of $2,590 before gradually surging to an all-time high of $4,590 in 2022.
Challenges to GDP growth
Egypt’s debt-to-GDP ratio increased significantly, from 69.6 percent in 2010 to 92.7 percent in 2023, according to the International Institute for Strategic Studies. The country faced a shortage of foreign currency, and to reduce its large debt, the government shrunk its social safety net. Government spending dropped from about 11.5 percent of GDP in 2016 to under 7.3 percent in 2022.
Russia-Ukraine war
Egypt managed to avoid a complete lockdown during the COVID-19 pandemic, but its economy was severely impacted by the disruption caused by Russia’s invasion of Ukraine in 2022. The country relies heavily on wheat exports from both Russia and Ukraine. Egypt further devalued its currency to qualify for a loan from the IMF, losing more than half of its value since February 2022.
Egypt has also faced sharp inflation, which hit a record high of 38 percent in September 2023. According to official statistics, food prices increased more than 70 percent in the 12 months following August 2022.
Middle East tensions
The Egyptian economy, which relies heavily on tourism, remittances, Suez Canal revenues, foreign debt, and capital flows, is now also experiencing the repercussions of the Gaza war and Red Sea tension, placing additional strain on Egypt’s economic reform and development trajectory, according to a report by the UNDP.
The report estimates that Egypt’s GDP would be lower by 2.6 percent in the fiscal year 2023–2024 and 1.3 percent in the fiscal year 2024-2025 in a medium-intensity scenario. Due to regional tensions, the unemployment rate is also expected to increase, with lasting effects, from 7.8 percent to 8.7 percent in a medium-intensity scenario and 9.1 percent in a high-intensity scenario.
UNDP estimates the decline in tourism and the Suez Canal revenues in the two fiscal years 2023-2024 and 2024-2025 to be around $9.9 billion in a medium-intensity scenario and $13.7 billion if the war intensifies with the involvement of other regional actors.
To restore macro-financial stability, the Egyptian government has already signed several new agreements that have increased inflows of foreign currency and capital. Along with implementing prudent macroeconomic policies and recovery measures, the government is working on mitigating the economic hurdles and impact of regional tensions on its growth and reform.
Progress and reforms
An IMF mission to Egypt recently concluded, revealing that the country has made substantial progress on policy discussions toward the completion of the fourth review under the Extended Fund Facility (EFF).
With ongoing geopolitical tensions in the region, the economic outlook for the region, including Egypt remains challenging. Spillovers from conflicts and trade disruptions in the Red Sea continue to affect sentiment negatively and cause substantial declines of up to 70 percent in Suez Canal receipts, a significant foreign currency source for Egypt.
In addition, an increasing number of refugees is adding to fiscal pressures on public services, especially health and education.
Egypt has implemented key reforms to preserve macroeconomic stability despite the external environment. Unifying the exchange rate since March has eliminated the backlog of FX demand and eased imports. The central bank also reiterated its commitment to sustain a flexible exchange rate regime to shield the economy from external shocks. In addition, substantial monetary policy tightening has helped contain inflationary pressures, albeit increases in administrative prices have temporarily restrained progress.
Going forward, the focus needs to remain on ensuring inflation is on a firm downward trend toward the medium-term target. Continued fiscal discipline is also contributing to reducing public sector debt vulnerabilities. At the same time, as agreed with the authorities, further efforts will be needed to mobilize domestic revenues, contain fiscal risks and expand the social safety net.
Opportunities for future growth
Egypt’s economy has shown remarkable resilience and potential for growth, presenting various opportunities for future development. One key area is the private sector which has been steadily expanding and will continue playing a pivotal role in driving economic growth. The government’s proactive efforts to promote economic development and attract foreign investment have paid off, positioning Egypt as one of the top destinations for foreign direct investment in Africa.
The services sector is a major contributor to Egypt’s GDP, leveraging the country’s strategic location and well-developed infrastructure. This makes Egypt an attractive hub for trade and commerce, with significant growth opportunities in logistics, tourism and financial services. The tourism industry, in particular, has seen a resurgence, contributing substantially to the national economy.
Moreover, Egypt’s economy is diversifying, with an increasing focus on industries such as manufacturing, agriculture, and renewable energy. This diversification is expected to continue, with promising growth prospects in textiles, food processing, and solar energy sectors. The manufacturing sector, already a significant part of the economy, is poised for further expansion, driven by innovation, localization and sustainability initiatives.
Overall, Egypt’s economy has a robust foundation for future growth, supported by a dynamic private sector, strategic geographic advantages, and a diversifying industrial base. With continued investment in infrastructure, education, and innovation, Egypt is well-positioned to achieve sustained economic development and emerge as a global economic powerhouse.
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FAQs:
What is Egypt’s current GDP value?
Egypt’s GDP in 2022-2023 amounted to EGP10.2 trillion ($202.18 billion), with a target of reaching EGP9.2 trillion ($182.36 billion) in the current financial year.
What are the primary contributors to Egypt’s GDP?
Several sectors contribute to the growth of Egypt’s GDP, including the oil and gas, tourism, agriculture, manufacturing, and construction sectors. The Suez Canal is also a major source of income for Egypt.
What is the role of oil in Egypt’s economy?
Egypt’s oil and gas industry is a major backbone of the country’s economic prosperity and represents about a quarter of its GDP. According to Mordor Intelligence, the industry’s market size was estimated at $7.48 billion in 2024 and is expected to reach $8.68 billion by 2029.
What is Egypt’s GDP outlook?
In its latest World Economic Outlook report, the IMF predicted that Egypt’s economy would grow 4.1 percent in 2025.
