Egypt Country Profile
ARAB REPUBLIC OF EGYPT
OFFICE OF COMMERCIAL AFFAIRS, ROYAL THAI EMBASSY, CAIRO THAI TRADE CENTER
1 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
Background: The regularity and richness of the annual Nile River flood, coupled with semi-isolation provided by deserts to the east and west, allowed for the development of one of the world's great civilizations. A unified kingdom arose circa 3200 B.C., and a series of dynasties ruled in Egypt for the next three millennia. The last native dynasty fell to the Persians in 341 B.C., who in turn were replaced by the Greeks, Romans, and Byzantines. It was the Arabs who introduced Islam and the Arabic language in the 7th century and who ruled for the next six centuries. A local military caste, the Mamluks took control about 1250 and continued to govern after the conquest of Egypt by the Ottoman Turks in 1517. Following the completion of the Suez Canal in 1869, Egypt became an important world transportation hub, but also fell heavily into debt. Ostensibly to protect its investments, Britain seized control of Egypt's government in 1882, but nominal allegiance to the Ottoman Empire continued until 1914. Partially independent from the UK in 1922, Egypt acquired full sovereignty with the overthrow of the British- backed monarchy in 1952. The completion of the Aswan High Dam in 1971 and the resultant Lake Nasser have altered the time-honored place of the Nile River in the agriculture and ecology of Egypt. A rapidly growing population (the largest in the Arab world), limited arable land, and dependence on the Nile all continue to overtax resources and stress society. The government has struggled to meet the demands of Egypt's growing population through economic reform and massive investment in communications and physical infrastructure. Egyptian youth and opposition groups, inspired by events in Tunisia leading to overthrow of the government there, organized a "Day of Rage" campaign on 25 January 2011 (Police Day) to include non-violent demonstrations, marches, and labor strikes in Cairo and other cities throughout Egypt. Protester grievances focused on police brutality, state emergency laws, lack of free speech and elections, high unemployment, rising food prices, inflation, and low minimum wages. Within several days of the onset of protests, President MUBARAK addressed the nation pledging the formation of a new government, and in a second address he offered additional concessions, which failed to assuage protesters and resulted in an escalation of the number and intensity of demonstrations and clashes with police. On 11 February, recently appointed Vice President SULIMAN announced MUBARAK's resignation and the assumption of national leadership by the Supreme Council of Armed Forces (SCAF). In a March 19, 2011 referendum, Egyptians voted overwhelmingly to amend Egypt’s constitution, thus setting the legal groundwork for democratic parliamentary and presidential elections. The referendum included amendments that set term limits for the president, affirmed judicial oversight of elections, and prevented the state of emergency from remaining in effect for longer than six months unless approved by a public referendum. It also provided for the establishment of a 100-member constituent assembly to draft a new constitution. In November 2011, Egyptians began voting in elections for Egypt’s People’s Assembly.
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Basic Data Area: 1,001,450 sq. km Population: 82,079,636 (July 2011) Capital City: Cairo (population - 17 million) Other Cities: Alexandria (6 million), Aswan, Asyut, Port Said, Suez, Ismailia. Administrative Division: 27 governorates (muhafazat, singular - muhafazat); Ad Daqahliyah, Al Bahr al Ahmar (Red Sea), Al Buhayrah, Al Fayyum, Al Gharbiyah, Al Iskandariyah (Alexandria), Al Isma'iliyah (Ismailia), Al Jizah (Giza), Al Minufiyah, Al Minya, Al Qahirah (Cairo), Al Qalyubiyah, Al Uqsur (Luxor), Al Wadi al Jadid (New Valley), As Suways (Suez), Ash Sharqiyah, Aswan, Asyut, Bani Suwayf, Bur Sa'id (Port Said), Dumyat (Damietta), Janub Sina' (South Sinai), Kafr ash Shaykh, Matruh, Qina, Shamal Sina' (North Sinai), Suhaj People: Eastern Hamitic (Egyptians, Bedouins, and Berbers) (99%); Greek, Nubian, Armenian, other European (primarily Italian and French) (1%)
Languages: Arabic (official), English widely understood, French Religion(s): Muslim (mostly Sunni) (90%), Coptic Christian (9%) and other (1%) Currency: 1 Egyptian Pound (LE) = 100 Piastres (PT) Location : Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula Land Boundaries: total: 2,665 km border countries: Gaza Strip 11 km, Israel 266 km, Libya 1,115 km, Sudan 1,273 km Terrain: Desert plateau, except Nile valley and delta. Climate: Dry, hot summers; moderate inters. Natural Resources: petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, zinc Major political parties: Freedom & Justice (Muslim Brotherhood), El Nour (Ultra conservative Salafists), Wafd Party and Tagammu Party (Liberal) Government Republic Head of State Field Marshall Tantawi (Head of the Supreme Council of the Armed Forces, de facto ruler of Egypt since February 2011) and is slated to hand over that function to a new president once presidential elections are held, likely by June 30, 2012) Prime Minister/Premier: Kamal El Ghanzouri Foreign Minister: Dr Muhammad Kamel Amr Minister of Independence: 1922. Constitution 11 September 1971; amended 22 May 1980, 25 May 2005, and 26 March 2007; note - constitution suspended by the military caretaker government 13 February 2011 and a new provisional constitution adopted 30 March 2011 Cabinet People's Assembly (498 elected members and up to 10 presidentially appointed), and Shura (consultative) Council (180 elected members, and 90 presidentially appointed). The two houses of Egypt’s parliament—the People’s Assembly and the Shura Council—were dissolved in February 2011, but will be seated again in 2012 after elections are completed for each house. Membership of / ABEDA, AfDB, AFESD, AMF, AU, BSEC (observer), CAEU, Participation in CICA, COMESA, D-8, EBRD, FAO, G-15, G-24, G-77, IAEA, international IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, groups/organizations: IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, LAS,
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MIGA, MINURSO, MONUSCO, NAM, OAPEC, OAS (observer), OIC, OIF, OSCE (partner), PCA, UN, UNAMID, UNCTAD, UNESCO, UNHCR, UNIDO, UNISFA, UNMIL, UNMISS, UNOCI, UNRWA, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO
Economy
Overview
The Egyptian economy has been suffering since the January 2011 revolution. The political uprising has had an impact on the macro-economy, leading to a severe reduction in confidence and investment outflows, as well as a drop in tourism revenues and foreign investment. The uprising and the continued political tensions throughout the year have created a number of economic vulnerabilities. Real growth, which had averaged over 6% in 2006- 2010, dropped to 1.8% in the financial year that ended in June 2011 and 0.3% year-on-year in July-September 2011. But Egypt needs to grow by at least 6% to absorb new entrants to the labour market. Poverty has also increased over the past two years.
Egypt’s external position is fragile and the country depleted more than half of its net international reserves. The pace of reserve loss is unsustainable and the Central Bank of Egypt has been allowing the Egyptian pound to depreciate albeit slowly. Public finances are also under pressure. Populist measures taken post-revolution created burdens on the budget at a time when revenues were falling pushing the deficit up.
Egypt’s short-term economic outlook is fraught with challenges: the lack of investments needed to create jobs, a wide fiscal deficit exacerbated by the increasing costs of financing the deficit, a weakening external account, and pressures on the currency. The slowdown in the global economy is creating additional challenges.
Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but opened up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni MUBARAK. Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth. Despite the relatively high levels of economic growth in recent years, living conditions for the average Egyptian remained poor and contributed to public discontent. After unrest erupted in January 2011, the Egyptian Government drastically increased social spending to address public dissatisfaction, but political uncertainty at the same time caused economic growth to slow significantly, reducing the government's revenues. Tourism, manufacturing, and construction are among the hardest hit sectors of the Egyptian economy, and economic growth is likely to remain slow at least through 2012. The government is utilizing foreign exchange reserves to support the Egyptian pound and Egypt may seek a loan from the International Monetary Fund.
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Basic Economic Facts
Central bank: Central Bank of Egypt (www.cbe.gov.eg) GDP (official exchange US$ 231.9 billion (2011) rate): GDP (purchasing US$ 515.4 billion (2011), US$ 509.3 billion (2010), US$ 484.3 billion power parity): (2009), country comparison to the world: 27 GDP - real growth 1.2% (2011), 5.1% (2010), 4.7% (2009) rate: country comparison to the world: 178 GDP per capita US$ 2,892 (2011) (Current Prices): GDP - per capita US$ 6,500 (2011 ), US$ 6,500 (2010 ), US$ 6,300 (2009 ) (PPP): country comparison to the world: 133 GDP (PPP) share of 1980 (0.46%), 1990 (0.56%), 2000 (0.59%), 2010 (0.67%), 2015 forecast world total: (0.72%) GDP - composition by agriculture: 14.4%, industry: 39.5%, services: 45.8% (2011 ) sector: Reserves of foreign US$ 15.17 billion (March, 2012), US$ 24.410 billion (31 December 2011), exchange and gold: US$ 35.79 billion (31 December 2010), country comparison to the world: 51 Labor force: 27.74 million (2011 ), country comparison to the world: 22 Labor force - by Agriculture: 32%. industry: 17%, services: 51% (2011 ) occupation: Unemployment rate: 12.2% (2011 ), 9% (2010 ), country comparison to the world: 129 Investment (gross 15.8% of GDP (2011 ), country comparison to the world: 162 fixed): Budget: revenues: US$ 44.73 billion expenditures: US$ 69.28 billion (2011 ) Taxes and other 19.3% of GDP (2011 ) revenues: country comparison to the world: 163 Budget surplus (+) or -10.6% of GDP (2011 ) deficit (-): country comparison to the world: 201 Public debt: 85.7% of GDP (2011 ), 81.4% of GDP (2010 ), 75.6% of GDP (2009) country comparison to the world: 16 Public deficit (General 2007 (-7.5%), 2008 (-7.8%), 2009 (-7%), 2010 (-8.2%), 2011 (-7.6%) government net lending /borrowing as a % of GDP) Inflation rate 13.3% (2011 ), 11.1% (2010 ) (consumer prices): Country comparison to the world: 203 Central bank discount 8.68% (31 December 2011 ), 8.5% (31 December 2010 ) rate: country comparison to the world: 38 Commercial bank 12% (31 December 2011), 11.008% (31 December 2010 ) prime lending rate: country comparison to the world: 81 Stock of narrow US$ 46.92 billion (31 December 2011 ), US$ 38.5 billion (31 December money: 2010 ), country comparison to the world: 48 US$ 196.3 billion (31 December 2011 ), country comparison to the world: 40 Stock of broad money: US$ 168.3 billion (31 December 2010 ) Stock of domestic US$ 130.7 billion (31 December 2011 ), country comparison to the world: 47 credit: US$ 141.6 billion (31 December 2010 ) Market value of US$ 82.49 billion (2010), country comparison to the world: 44 publicly traded shares: US$ 89.95 billion (2009), US$ 85.89 billion (2008) cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, Agriculture - products: sheep, goats Industries textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures
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Industrial production 5.7% (2011), country comparison to the world: 58 growth rate: Electricity - 123.9 billion kWh (2010), country comparison to the world: 28 production: Electricity - 109.1 billion kWh (2010 ), country comparison to the world: 29 consumption: Electricity: Exports : 1.022 billion kWh (2010) Imports : 896 million kWh (2010) Oil: Production: 662,600 bbl/day (2011 ), country comparison to the world: 29 Consumption: 740,000 bbl/day (2011 ), country comparison to the world: 25 Exports: 163,000 bbl/day (2010), country comparison to the world: 58 Imports: 177,200 bbl/day (2010), country comparison to the world: 53 Proven reserves: 4.4 billion bbl (2011), country comparison to the world: 26 Natural gas - Production: 62.69 billion cu m, country comparison to the world: 13 production: Consumption: 44.37 billion cu m, country comparison to the world: 18 Exports: 18.32 billion cu m, country comparison to the world: 13 Imports: 0 cu m, country comparison to the world: 185 Proven reserves: 2.186 trillion cu m, country comparison to the world: 16 Current account US$ -8.609 billion (2011 ), country comparison to the world: 181 balance: -US$ 4.435 billion (2010 ) Current account -2.7% of GDP (2011) balance by percentage of GDP Exports: US$ 27.96 billion (2011 ), country comparison to the world: 63 US$ 25.02 billion (2010 ) Exports as percent of 25.1% GDP (Exports of goods and services) Shares in world total 0.17% merchandising export Shares in world total 0.64% commercial services export Exports - commodities: crude oil and petroleum products, cotton, textiles, metal products, chemicals, processed food Exports - partners: US 7.6%, Italy 7.3%, India 6.1%, Spain 5.4%, Saudi Arabia 5.4%, France 4.7%, Libya 4% (2010) US$ 57.41 billion (2011 ), country comparison to the world: 51 Imports US$ 51.54 billion (2010 ) Imports - commodities: machinery and equipment, foodstuffs, chemicals, wood products, fuels US 11.8%, China 10.4%, Germany 6.5%, Italy 6.4%, Saudi Arabia 4.1% Imports - partners: (2010) US$ 37.28 billion (2011 ), country comparison to the world: 66 Debt - external: US$ 35.37 billion (2010 ) Stock of direct foreign US$ 75.7 billion (2011 ), country comparison to the world: 45 investment - at home: US$ 73.1 billion (2010 ) (FDI outflows) Stock of direct foreign US$ 6.148 billion (2011), country comparison to the world: 60 investment - abroad: US$ 5.448 billion (2010 ) (FDI inflows) Egyptian pounds (EGP) per US dollar Exchange rates: 5.94 (2011), 5.6258 (2010), 5.545 (2009), 5.4 (2008), 5.67 (2007) Market value of 2008 (US$ 139.289 billion), 2010 (US$ 85.885 billion), 2011 (US$ 89.953) publicly traded shares
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Orascom Construction Inds (Construction Services), Orascom Telecom Largest Companies in (Telecommunications services), Telecom Egypt (Telecommunications Egypt services), Commercial International Bank (Regional Banks) (2011) Best countries for Overall ranking: 94 out of 183 countries (2011) doing business Subcategories: Starting a business: 18 out of 183 countries Registering property: 93 out of 183 countries Paying Taxes: 136 out of 183 countries Getting credit: 72 out of 183 countries Protecting investors: 74 out of 183 countries Trading across border: 21 out of 183 countries Enforcing Contracts: 143 out of 183 countries Global competitiveness 94 ranking (2011/2012) (ranking by country on a basis of 142, the first is the best) Index of Economic Freedom Ranking: 96 Score: 59.1 (Mostly Unfree) (2009)
WSJ and Heritage (100=totally free 0=totally repressed ) Foundation
A wave of protests of relatively loosely organized youth groups with support of Islamist and civil organizations forced an end to the 30+ years of Mubarak rule. In February the ever- present military took power by appointing an interim civil government, which made it very clear -right from the start- to be willing to honor all existing international financial and diplomatic obligations. Parliamentary and presidential elections plus a referendum on a potentially controversial new constitution are announced for the coming nine months.
Egypt’s economic outlook for 2012 is uncertain, but the worst fears of a total collapse are highly unlikely to materialize. GDP growth for 2012 will be lower (but remains positive), while inflation, fiscal and current account deficits will be higher than in previous years. Moderately optimistic consensus projections made just a few months ago, were all adjusted downward, but assume that the economy will in the end weather it through. Egypt’s financial system is in the favorable position of having built up large financial reserves in the past decade as a first line of defense.
Economic structure and growth Egypt is for 97% barren territory, with most economic activity taking place in the highly fertile and irrigated Nile valley. Natural fresh water resources are non-existent apart from the Nile. Annually some 1,000 cubic m of fresh water per capita is extracted, three to six times as much as in similarly arid neighboring North Africa, Israel and Jordan. Most of the withdrawn water is used by agriculture (source of 13% of GDP, but using 86% of water available) on just 3% of total territory.
The energy sector (oil and gas) accounts for some 6% of GDP. Oil production more or less equals domestic consumption, but a third of the gas production is exported, enough to dominate Egypt’s merchandise exports with a 50% share. On a global scale Egypt is not an energy power of any importance, although the current –but temporary- regional geopolitical impact of its gas exports to Israel, Jordan, Syria and Lebanon since 2008 is substantial. Proven oil and gas reserves suffice for 16 and 35 years of current annual output respectively.
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After a national revolution ousted the British-backed monarch in 1952, Egypt's economy for decades was highly centralized. Opening-up started in 1980, under former president Mubarak. The economic authorities pursued -with general international praise from 2004 to 2008- strong pro-market policies to attract foreign investment and spur GDP growth. But in recent years of global financial crisis, growth of the non-energy export-led sectors (some energy intensive manufacturing and tourism) fell, as did Suez Canal revenues (which account for 2% of GDP).
Despite the high level of average annual economic growth over the past decade (5%), living conditions for the average Egyptian have remained poor as high population growth (2% p.a.) eroded much of the progress. Currently, still a high proportion of Egyptians live in poverty (20% by national definition) and 2% even on less than USD 1,25 a day (internationally comparable).
Short-term GDP growth for 2011 has been estimated 1.2% much lower than in the previous years. Early 2011, political tensions rose and caused economic and logistic disruptions, which caused negative q-o-q GDP growth. In particular the process to and outcomes of the crucial presidential, parliamentary elections plus a referendum on a new constitution have been causes of uncertainty till the end of the year. As a result it is now projected that for 2012 as a whole, private consumption, investment and other exports were likely to remain subdued. But not all is bad or negative: tourism revenues (6% of GDP and 20% of export earnings in 2010) have gotten down, although -apparently- not as badly as initially feared. Also, energy-related and Suez Canal revenues are hardly or not affected, and real government consumption (food and energy subsidies and public sector wages) has increased by 7.5% in response to the recent food and energy prices and political unrest. These latter spending categories have partially compensated the slowdown of domestic private consumption and investment.
Overall GDP growth in 2011 made by respected sources differ widely (from 1.3% to 1.2 % for 2011), but a net economic contraction (i.e. a shrinking economy) is not one of the noted outcomes. In baseline scenario, growth has decelerated to 4% at most, with substantial downward risk as political uncertainty negatively impacted household and business spending for some time. But for 2012, a modest recovery to 5% growth, assuming at least some restoration of political stability, is projected. This growth rate is still below the level of 6-7% needed to absorb the influx of young entrants to the labor market and reduce the high unemployment levels to be estimated to climb to at least 10% (official data, excluding high hidden unemployment).
Over the past decade financial sector policies were aimed at (i) consolidating smaller banks into larger ones, privatization and restructuring of state-owned banks; (ii) reducing non- performing loans (NPLs, which are successfully down from 22% of total loans in 2004 to 14% by mid-2010; over 95% of NPLs is now provisioned for) and (iii) improving supervision. All this has resulted in more solid banks (with on average and by national standards 15% capital adequacy) and much better provisioned banks. The number of banks dropped from 61 in 2004 to 39 currently, although they remain geared to service the government and large companies. Only 13% of small enterprises (that employ 75% of Egypt’s workforce) actually have access to bank finance. Also, there is now ample liquidity in the banking system: the private sector loans-to-deposit ratio is structurally at around 60 percent, the remainder largely invested in liquid government bonds. The decline in economic growth in 2011 as a result of lower exports and tourism revenue will impact banks’ profitability and likely lead to higher NPLs.
Economic policy Since the late 1990s, the government has shown a commitment to economic liberalization and speeding up the privatization of state assets, while at the same time improving the business climate to attract foreign investment. The last Mubarak cabinet pursued liberal economic
8 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile policies, resulting in a period of strong, investment-led, economic growth and achieved real economic growth of up to 9%. But, with the ministers most closely identified with economic reforms no longer their positions, the interim government is likely to put reforms on hold, concentrating on the more urgent task of ensuring the delivery of essential goods and services to the population. The budget deficit may increase to 12% of GDP. Government revenues are expected to be lower than budgeted in 2012 given the expected lower economic activity and by another postponement of the introduction of the unpopular VAT. But revenues from the oil and gas sector, a major component of total tax income, will remain high, as this sector was hardly affected by the political unrest and prices are up. On the fiscal spending side, wage increases to placate the large number of public-sector workers, increased food and energy subsidies (in 2011: 25% of total expenditures) and higher interest costs (23% of expenditures) on public debt will lead to a much higher current spending by the government in 2012. In addition, there will also be pressure on the government of whatever make-up to compensate for the unrest-related absence of private sector investment.
The ousted pro-market Minister of Finance was a strong advocate of fiscal restraint and gained respect for years of decreasing fiscal deficits and public debt/GDP ratios, contributing to better sovereign and country risk ratings. Just before the unrest broke out, a 3.5% deficit was targeted in 2014, down from almost 10% in 2004. With a deficit in 2011 of up to 12% of GDP, the public debt/GDP ratio -in our baseline scenario- increased to 86% in 2011. Thanks to high inflation (2011: 15%), this is a modest reversal of a speedy downward trend, which started in 2005, when the ratio amounted to 131% of GDP.
Almost all (90%) of government debt is held domestically and -given the ample liquidity of the banking system- financing has in the past not posed problems. Nevertheless, by mid-April the authorities were sounding the IMF and WB for soft loans to finance their expected 2011/2012 deficit, indicating that the authorities feel the need to diversify their creditor base and reduce upward pressure on the domestic interest rates.
Consumer price inflation has been high in recent years, reaching 18% in 2008, and is again increasing owing to higher global commodity prices and the political turbulences of early 2011. Not increased demand, but supply shortages and logistical distribution problems drove up food prices. As interest rate hikes or other monetary policy measures are irrelevant as a remedy in such circumstances, the policy interest rates are projected to remain stable. Consumer price inflation is set to increase in 2011 to 15% from its already high level of 11% in 2010.
Recent events also put the Egyptian pound (EGP) under strong downward pressure against the US dollar, as its value decreased by 5% in 2011. The central bank used some of its ample reserves to defend the currency, which proved partially successful in dampening EGP’s depreciation. However, with the prospect of falling foreign exchange reserves, costly interventions will remain modest and a further depreciation of around a 10% for 2012 as a whole is projected. This should also mitigate at least partly the effect of high domestic inflation on the external prices of non-oil exportable goods (i.e. textiles) and services (tourism), which is helpful in keeping the large trade deficit somewhat in check.
Balance of Payments Egypt has for long been a rather closed economy with merchandise exports at only 10% of GDP. With imports of goods structurally higher at 20% or more of GDP, this implies a trade deficit of 10% to 15% of GDP. Since 2008, the country has become a major exporter of natural gas via pipelines to only a narrow range of neighboring economies. Together with very modest income from oil sales, natural gas exports account for 50% of all merchandise exports. Some diversification of the export mix, to energy intensive products like cement, iron, fertilizers and other petrochemicals is underway, but structural quality problems hamper the export performance of these products, causing the export product diversification to remain
9 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile narrow. On the import side, industry and development related goods (60%) dominate, with consumer goods accounting for only 20% of import value, which is all appropriate to a developing country.
Egypt is a member of the World Trade Organization and concluded an Association Agreement with the EU. This facilitates access to the EU markets, but also obliges the authorities to phase out tariffs on imports by 2015. A free-trade bilateral agreement with the US is in the making since the early 1990s, but the US still considers Egypt’s economy too much dominated by the state and Egypt’s ―Military Inc.‖, which is estimated to own as much as 40 % of the nation’s economy.
Existing bilateral US-Egypt tariff reductions can still unilaterally be withdrawn. Although a member of African and Middle Eastern trade bodies, these markets are not significant yet as bilateral trade is still low: the quality of Egypt’ s output cannot compete on the demanding Arab markets and black Africa’s markets too small to make an impact.
The large structural trade deficit is partly compensated by surpluses on services balance, where revenues are derived from tourism (expected to be down in 2012) and the Suez Canal transit fees (likely to remain unaffected by the turmoil). The services surplus in 2012 is projected to be substantially reduced to just 3% of GDP, against 10% in 2009. Of little help to restore balance of payment equilibrium are the transfers of Egyptians working abroad. These may lower to 3% of GDP in 2011, half the level of 2008 and 2009, when the Gulf state economies were still booming. Helped by low average interest paid on external debt (2% to 3% on principal), the county’s income balance is reported to be more or less in equilibrium, despite the negative net investment position of the economy (-16% of GDP). The overall effect of these developments is a worsening of the current account from an -on average- near equilibrium in the past five years to a projected deficit of 6% in 2011. Provided political near-stability is maintained, tourist should return in higher numbers and the current account balance may improve in 2012, when the deficit may be reduced to 3% of GDP.
The current account deficits have until recently largely been financed by direct investments, with debt inflows and portfolio investments playing a minor role. For 2011 capital inflows most likely declined compared with recent years as investor confidence is down due to the political instability. Also, with domestic interest rates hardly changing, the value of the pound declined. The Central Bank resorted to modest selling of foreign reserves early in 2011 to support the Egyptian Pound.
The risk of imposition of controls on access to foreign exchange for capital account purposes (thus other than paying for imports) has increased, but all depends on the maintenance of commercial banks’ and official FX reserves. Such currency restrictions will affect the inflow of dollar transfers from expatriate Egyptians into their homeland’s banking system. Foreign currencies inflows may increasingly be diverted via non-bank channels (that is paper dollars smuggled in) to a re-emerging black market, rather than be stored in the banking system and add to their FX reserves. Late 2011, before the unrest erupted, the solid (although far from dynamic), financial system was adequately buffered by high local and foreign currency reserves. These amounted to almost USD 33bn and USD 19bn by the end of 2011. By the end of the fourth quarter of 2011 the central bank’s FX reserves had declined modestly to just over USD30bn, a decline of 9%, but still at 6 months of imports. Thus, as far as data is currently available, these two sources of foreign reserves seem to have held up relatively well and the recent return to relative stability offers positive prospects.
Agriculture Approximately one-third of Egyptian labor is engaged directly in farming, and many others work in the processing or trading of agricultural products. Nearly all of Egypt's agricultural
10 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile production takes place in some 2.5 million hectares (6 million acres) of fertile soil in the Nile Valley and Delta. Some desert lands are being developed for agriculture, including the ambitious Toshka project in Upper Egypt, but some other fertile lands in the Nile Valley and Delta are being lost to urbanization and erosion.
Warm weather and plentiful water permit several crops a year. Further improvement is possible, but land is worked intensively and yields are high. Cotton, rice, wheat, corn, sugarcane, sugar beets, onions, and beans are the principal crops. Increasingly, a few modern operations are producing fruits, vegetables and flowers, in addition to cotton, for export. While the desert hosts some large, modern farms, more common traditional farms occupy one acre each, typically in a canal-irrigated area along the banks of the Nile. Many small farmers also have cows, water buffaloes, and chickens, although larger modern farms are becoming more important.
The United States is a major supplier of wheat, corn, and soybean products to Egypt, almost all through commercial sales. Egypt is one of the U.S.'s largest markets for wheat sales. U.S. agricultural sales to Egypt average US$ 2 billion annually. U.S. food assistance programs to Egypt ended in 1992 as Egypt became more prosperous. Egypt continues to receive modest food assistance through the World Food Program and from France.
"Egypt," wrote the Greek historian Herodotus 25 centuries ago, "is the gift of the Nile." The land's seemingly inexhaustible resources of water and soil carried by this mighty river created in the Nile Valley and Delta the world's most extensive oasis. Without the Nile, Egypt would be little more than a desert wasteland.
The river carves a narrow, cultivated floodplain, never more than 20 kilometers wide, as it travels northward toward Cairo from Lake Nasser on the Sudanese border, behind the Aswan High Dam. Just north of Cairo, the Nile spreads out over what was once a broad estuary that has been filled by river deposits to form a fertile delta about 250 kilometers wide (150 mi.) at the seaward base and about 160 kilometers (96 mi.) from south to north.
Before the construction of dams on the Nile, particularly the Aswan High Dam (started in 1952, completed in 1970), the fertility of the Nile Valley was sustained by the water flow and the silt deposited by the annual flood. Sediment is now obstructed by the Aswan High Dam and retained in Lake Nasser. The interruption of yearly, natural fertilization and the increasing salinity of the soil has been a manageable problem resulting from the dam. The benefits remain impressive: more intensive farming on millions of acres of land made possible by improved irrigation, prevention of flood damage, and the generation of billions of low-cost kilowatt hours of electricity.
Due to climate change and rising sea levels, the lower delta faces issues with soil salinity. Waters from the Mediterranean infiltrate the soil, spoiling hundreds of acres of previously lush farm lands. Though the sea rise is gradual and Egypt has time to adapt, the population cannot afford losing more farm land seeing how thousands of acres have already been swallowed up by urban sprawl. Farmers in affected areas have to pump in more fresh water and purchase expensive sand and fertilizer to save their lands, which leads many to abandon the land and become climate refugees.
The Western Desert accounts for about two-thirds of the country's land area. For the most part, it is a massive sandy plateau marked by seven major depressions. One of these, Fayoum, was connected about 3,600 years ago to the Nile by canals. Today, it is an important irrigated agricultural area.
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Production - Reviews
Crop production in 2005 included: 22,283,961 million tonnes (t) 8,140,961t wheat, 6,800,000t maize, 6,200,000t rice, *2,500,000t potatoes, *6,600,000t tomatoes, *1,300,000t grapes, 1,170,000t dates, 2,797,600t citrus fruit, 16,335,000t sugar cane, 3,429,535t sugar beets, 310,000t olives, 820,000t seed cotton, 294,000t cotton lint, 242,210t oilcrops, 484,040t pulses, 950,000t sorghum, 33,700t treenuts, 8,195,635t fruit in total, 16,140,402t vegetables in total. Livestock production included: 1,435,923tt meat in total, 320,000t beef, 270,000t buffalo, 69,840t rabbit, 40,000t camel meat, 60,500t lamb and goat meat, 664,240t poultry, 240,000t eggs, 4,708,100t milk, 8,000t honey, 117t cocoons, silk, 5,100t sheepskins, 32,480t cattle hides, 7,550t greasy wool.
Natural Resources In addition to the agricultural capacity of the Nile Valley and Delta, Egypt's natural resources include petroleum, natural gas, phosphates, and iron ore. Crude oil is found primarily in the Gulf of Suez and in the Western Desert. Natural gas is found mainly in the Nile Delta, off the Mediterranean seashore, and in the Western Desert. Oil and gas accounts for approximately 12% of GDP. Export of petroleum and related products (including bunker and aviation sales) amounted to approximately US$ 11.4 billion in fiscal year 2009-2010.
Crude oil production has been in decline for over a decade, from a high of more than 920,000 barrels per day (BPD) in 1995 to less than 550,000 BPD as of October 2010. To minimize the growing domestic demand for oil-based products, estimated in July 2009 at more than 31 million metric tons per year, Egypt is encouraging the production of natural gas. Production of natural gas doubled from 21 million metric tons in mid-2005 to 43 million metric tons in July 2010. In FY 2010-2011, natural gas production amounted to 6.4 billion cubic feet (BCF) per day. In March 2009 the Egyptian Gas Holding Company announced plans for 23 new exploration wells with total investments of US$ 1.1 billion during fiscal year 2010-2011.
As of July 2011, crude oil and condensates reserves were estimated at 4.4 billion barrels, and proven natural gas reserves were estimated at 77 trillion cubic feet (TCF) with possible additional reserves totaling another 40-50 TCF. However, independent oil and gas experts indicated that Egypt’s proven natural gas reserves may be as high as 70 TCF, of which more than 80% (i.e., 57 TCF) is from the cone of the Nile Delta. Texas-based Apache Oil Company is the largest American investor in Egypt, with a total investment of more than US$ 7 billion since 2005.
The Ministry of Petroleum regards expansion of the Egyptian petrochemical industry and increased exports of natural gas as significant strategic objectives. Three liquefied natural gas (LNG) trains are operating in Egypt. The first is in Damietta on the eastern side of the Nile Delta and is operated by the Spanish electric utility Union Fenosa; the second is a project located at Idku in the western Delta, with British Gas (BG) Group and the Malaysian state oil company Petronas as the major investors; and the third, the Mediterranean Gas Complex in Port Said, utilizes gas for export and domestic consumption, with the Italian company AGIP and BP as the main shareholders.
Egypt and Jordan established the Eastern Gas Company to export natural gas to Jordan, and then later to Syria and Lebanon. In summer 2003 Egypt completed the first phase of the project by exporting gas to Jordan via a new pipeline from El Arish on Egypt's north Sinai cost to Taba on the Gulf of Aqaba, and then underwater to the Jordanian city of Aqaba. The second phase was completed in 2005, connecting the pipeline to the Jordanian town of Rihab, north of the capital Amman. While by 2008 gas exports grew to 12.6 million metric tons of oil equivalent, the Government of Egypt may have to import natural gas within 3 to 4 years in
12 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile order to meet domestic demand, particularly for producing electricity. In the wake of higher world market gas prices, the Government of Egypt in 2010 succeeded in renegotiating upward the price received under existing long-term gas export contracts with purchasers in Europe, Jordan, and Israel. The pipeline that carries gas through Egypt to Israel and Jordan was attacked on at least 10 separate occasions in 2011, resulting in the frequent disruption of supplies.
Fishing
There are active fishing industries in the Mediterranean and the Red Sea, as well as more limited freshwater fishing on the Nile and Lake Nasser. Egypt typically produces over 300,000 tonnes of seafood and 190,000 tonnes of freshwater fish per annum. Virtually all of this is used for domestic consumption. Eleven lakes used to provide an annual 173,000 tonnes of fish but this rate has declined in recent years due to overfishing, lack of investment and pollution.
Production - Reviews
In 2010, the total marine fish catch was 133,482 tonnes and the total crustacean catch was 13,660 tonnes.
Forestry
Forests covers less than 1 per cent of Egypt's land area. Timber imports in 2010 were US$927.7 million, while exports amounted to US$47.4 million.
Production - Reviews
Timber production in 2010 included 17,060,010 cubic metres (cum) roundwood, 268,000cum industrial roundwood, 134,000cum sawlogs & veneer logs, 56,300cum wood-based panels, 16,792,010cum wood fuel; 1,264,982 tonnes (t) charcoal, 460,000t paper and paperboard.
Industry and manufacturing
Industrial production, with a growth rate estimated at 2.5 per cent in 2010, is an important component of the economy, providing 32.1 per cent of GDP, while manufacturing provides 18.2 per cent. However, individually they were both outperformed by the total services industry that provided 52.4 per cent of GDP in 2010, of which tourism represented the lion's share.
The government places emphasis on: industrial diversification and import substitution, the development of downstream chemicals, and of heavy industry such as the Helwan Iron and Steel Company, the Nag Hammadi aluminium plant and El Dikheila integrated steel works. Industry and manufacturing has been dominated by state-owned companies however there is a renewed interest by the government to sell off enterprises, including metallurgical, food, wood pulp, and chemical processing, and various smelting works.
A number of cotton concerns are also on the privatisation list, although these companies are at risk, not from the shift in economic rationalisation, by rather global trading dynamics. World Trade Organisation (WTO) rulings that came into practice on 1 January 2005 removed all
13 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile global tariffs and subsidies on processed cotton. Egypt, as a major manufacture of cotton thread and cloths, could lose thousands of jobs and millions of dollars in export sales. However, a niche market is being formed, supplying cotton apparel to the US under the Qualified Industrial Zones (QIZ) protocol, whereby manufactured goods from nominated QIZ, which must contain 11.7 per cent Israeli input, will be given free access to US markets.
The petrochemical sector is a leading contributor to GDP and has a predicted 6 per cent annual growth.
Egypt has a growing automotive industry, supplying both vehicles and components. There are 18 vehicle manufacturers operating under joint trade agreements with foreign companies. BMW invested US$35 million in a new factory, providing jobs for 500 workers, which opened in May 2010. There are plans to invest a further US$25 million in more facilities. Nissan will open a new assembly plant, geared to produce 3,800 cars a year, which is scheduled to be operational by 2011.
With an estimated labour force of 20.7 million and around 2 million unemployed in 2010, Egypt needs to find around 800,000 new jobs each year to sustain its growth.
Tourism
Fortunate to have a superb range of attractions for tourists, Egypt has capitalized on its advantages and is drawing in increasing numbers of visitors from around the world, including the fast growing markets of Russia and Asia. Although the political unrest of early 2011 caused visitors to leave – the state Tourism has become the single greatest foreign exchange earner and represents a significant component of Egypt’s GDP at 15.4 per cent, contributing US$13 billion in 2009. The industry employed 13 per cent of all workers and earned US$7 billion from tourists alone, with a further US$2.6 billion in capital investment. Annual growth is predicted to increase by 5.4 per cent for 2006–15.
Archaeological attractions are the primary visitor attractions, although Egypt has increasingly enhanced its facilities by the development of resort tourism, especially on the Red Sea coast. More than 50 per cent of visitors are from Europe, nevertheless, in 2004 Gulf Arabs arrived in Cairo (by up to 32 per cent) in much larger numbers than before. They were particularly welcome as they are high-spending and longer visiting holidaymakers. These were tourists that had been deterred from visiting US and European destinations due to extra security and suspicion of middle-eastern travelers.
Mining
Government policy aims to encourage foreign and local companies to explore for and exploit raw materials. Agreements have been reached for exploration and production of sulphur, phosphate and gold. The government is keen to extend franchises for other minerals, especially titanium and silver. Among non-oil raw materials, only iron ore, phosphate rock and limestone is produced on a significant scale. Other minerals produced include baryte, clay, feldspar, fluorspar, gypsum, kaolin, quartz, salt, silica sand and talc. Manganese and chrome deposits have also been exploited, while commercial deposits of zinc, tin, lead and copper have been discovered in Sinai.
A contract to mine sulphur in Sinai is held by Freeport Egyptian Sulphur Company, a wholly owned subsidiary of US firm Freeport McMoran. The annual production capacity is thought to be around 250,000 tonnes per year (tpy). Egypt also has deposits of uranium.
14 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
Although Egypt has no bauxite, it has developed a significant aluminum industry based on electric power from the Aswan High Dam. Production was initially used for basic consumer goods but Egypt now exports a wide range of basic aluminum products.
Hydrocarbons
Introduction (All pubs)
The upstream oil and gas industry generates around 10 per cent of GDP and represents an important source of foreign currency, with oil accounting for about 40 per cent of total export revenues.
Egypt's production in 2010 was 350,000 barrels per day (bpd), with proven oil reserves of 3.6 billion barrels. Increasing industrialization and the rise in domestic oil consumption, has encouraged the government into continue with partnership deals for oil exploration. In July 2004 Egypt signed exploration deals with two prospecting firms, one from Tunisia and the other the US. In total, 14 wells will be drilled up to 2011.
BP's Saqqara oil field is expected to produce 40,000–50,000bpd annually from 2010. Other petroleum deposits have been discovered in the Qaran area of Egypt's Western Desert by the US-based Apache Corporation.
In view of limited oil reserves, interest has switched to gas exploration and proven reserves in 2004 were 1.85 trillion cubic meters (cum), which should last well into the twenty-first century at current annual rates of production of 26.8 billion cum. Egypt consumed 25.7 billion cum of natural gas in 2004 leaving a comparatively small amount for export. The completion of a small natural gas pipeline to Jordan has made the first natural gas exports possible; the pipeline is planned to extend to Syria, Turkey, Lebanon and Cyprus increasing the market still further.
Coal reserves at Maghara in Sinai total about 27 million tones; however, there is no commercial production.
Energy
Electricity is generated at thermal power stations throughout the country, and about a quarter of the total is supplied by the hydroelectric plant at the Aswan High Dam in Upper Egypt.
Around 98 per cent of all electricity needs is provided by the electricity sector but domestic demand is growing fast and to keep up with it Egypt has embarked on a major programme of capital investment. Not only are some current power stations being upgraded to produce more electricity but a number of new generating plants with the total capacity of 33,000MW are under construction. The OECD agreed a loan of US$20 million to fund the North Cairo Electricity Network, which should be operational by 2007, adding 750MW to the system.
There are a number of wind and solar power plants either newly opened or under construction with an expected total capacity of 297MW when they all become operational; the first began generating 93MW in 2004, in Za’farana.
15 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
Financial markets
Stock exchange
Egypt’s stock market is considered the best of the emerging markets. After seven years of stagnation caused by a series of knocks starting with the Asian financial crisis, then the 2000 Palestinian intifada, followed by the terrorist attack on the US in 2001and the devaluation of the Egyptian pound in 2003, the market has boomed on the back of rising oil prices, increased tourism and Arab money returning from the West.
Banking and insurance
The banking sector is dominated by four public-sector commercial banks – Banque Misr, Bank of Alexandria, Banque du Caire and the National Bank of Egypt – which hold about 60 per cent of deposits, 70 per cent of assets and 65 per cent of loans, and are the main conduit for public-sector trade, savings and financing.
In February 2004, Egypt was removed from the OECD list of non-co-operative countries on money laundering after reforms had been implemented.
The Central Bank of Egypt (CBE) strengthened the monetary policy framework over 2004 which should aid it as it manages and limits inflationary pressures while stimulating market driven interest rates. The IMF in a 2005 report stressed that the CBE independence from political interference should be maintained.
As a whole, strong current account trading enabled banks to strengthen their net foreign assets in 2004 and 2005 and the CBE also took advantage of market conditions to build up its reserves. Total external debt remained stable at about US$29 billion (31 per cent of GDP) by the end of 2004.
As part of the privatisation programme under way by the government two state banks are in the process of being sold off to the commercial sector. In October 2006, bids for the Bank of Alexandria valued the bank at US$1.6 billion – a figure over five times greater than the government's own valuation. Proceeds of the sale will go to re-capitalising other state-owned banks and a reduction in Egypt's public debt.
Central bank Central Bank of Egypt
16 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
Imports & Exports:
Egypt’s trade profile is characterized by huge trade deficits. The economy is highly dependent on oil exports, which is its major source of foreign income together with tourism receipts and US financial and military aid. It has to import most of its food, other commodities and equipment, since both its agricultural and industrial sectors are not well- developed. Since the 1990s, the government has pioneered several economic reforms through foreign donor aid. However, measurable benefits of these economic reforms are yet to be seen.
Value million US$ Egypt, Trade with the World Egypt, Trade with Thailand Imports Imports Change Change Change Change Year Imports Exports Balance + Year Imports Exports Balance + % % % % Exports Exports 2007 27,033 16,167 10,866 43,200 2007 222 5 217 227 2008 52,770 48.77 26,232 38.37 26,538 79,002 2008 629 64.71 12 58.33 617 641 2009 44,986 -17.30 24,270 -8.08 20,716 69,256 2009 556 -13.13 65 81.54 491 621 2010 53,021 15.16 27,334 11.21 25,687 80,355 2010 749 25.77 24 -170.8 725 773 2011 58,934 10.03 30,607 10.69 28,327 89,541 2011 651 -15.05 17 -41.18 634 668 Average Average Annual 14.17 13.05 13.61 Annual 15.58 -18.03 -1.23 growth growth
Egypt, Trade with the World Egypt, Trade with Thailand
60,000 800
50,000 700
600 40,000 500
30,000 400
300 20,000
200 10,000 100
0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Imports Exports Balance Imports Exports Balance
Egypt Trade: Imports Egypt import volumes reached US$58.93 billion in 2011, a 10.3% rise from the previous year’s level. Due to surplus imports, Egypt has had a negative balance of trade since the 1980s. Based on total import volumes, the country ranks 49th in the world. Food, commodities, equipment and wood products are the major items of import.
The US is the largest import partner. It accounts for more than 10.69% of the total imports, followed by China (9.14%), Germany (6.34%), Italy (5.09%), Kuwait (4.73%) and Turkey (1.38%).
Previously, Egypt used to be a strong trade ally of the communist bloc. Since the 1979 Camp David peace agreement with Israel, Egypt has become a staunch US ally, from whom it receives massive financial and military subsidies. It has gradually shifted trade partnerships to the western world, and enjoyed strong (but uneven) economic growth as a result. Egypt has signed several international trade agreements with partnering countries that govern the country’s international trade.
17 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
IMPORTS Value million US$ TOP 20 IMPORTS 2009-2011 HS Value million US$ Market Share Change % 4-digit heading of Harmonized System code 2009 2010 2011 2009 2010 2011 2010 2011 All Commodities 44,980 53,021 58,934 100.00 100.00 100.00 15.17 10.03 2710 Petroleum oils, other than crude……………...... 1,890 3,657 5,117 4.20 6.90 8.68 48.32 28.53 1001 Wheat and meslin………………………………………. 1,557 2,184 2,824 3.46 4.12 4.79 28.71 22.66 1005 Maize (corn)………………………………………...... 834 1,321 2,084 1.85 2.49 3.54 36.87 36.61 2711 Petroleum gases and other gaseous hydrocarbons……... 1,288 1,806 2,055 2.86 3.41 3.49 28.68 12.12 2709 Petroleum oils and oils crude…………………………... 1,080 1,321 1,699 2.40 2.49 2.88 18.24 22.25 7326 Articles of iron or steel…………………………………. 887 1,401 1,143 1.97 2.64 1.94 36.69 -22.57 3004 Medicaments………………………………………...... 876 898 1,142 1.95 1.69 1.94 2.45 21.37 8703 Motor cars and motor vehicles………………...... 843 1,349 1,132 1.87 2.54 1.92 37.51 -19.17 8517 Telephone sets………………………………………….. 710 1,096 1,121 1.58 2.07 1.90 35.22 2.23 7207 Semi-finished products of iron or steel………...... 828 868 1,096 1.84 1.64 1.86 4.61 20.80 7204 Ferrous waste and scrap………………………………... 475 669 1,016 1.06 1.26 1.72 29.00 34.15 4407 Wood sawn or chipped ………………………………… 808 889 966 1.80 1.68 1.64 9.11 7.97 1201 Soy beans………………………………………………. 661 695 911 1.47 1.31 1.55 4.89 23.71 2601 Iron ores and concentrates……………………………… 476 543 877 1.06 1.02 1.49 12.34 38.08 1511 Palms oil and its fractions……………………………… 453 526 825 1.01 0.99 1.40 13.88 36.24 1701 Cane or beet sugar and sucrose………………………… 282 471 757 0.63 0.89 1.28 40.13 37.78 7403 Refined cooper and cooper alloys……………………… 435 358 750 0.97 0.68 1.27 -21.51 52.27 8708 Parts & accessories of motor vehicles………………….. 592 923 704 1.32 1.74 1.19 35.86 -31.11 3901 Polymers of ethylene…………………………………… 442 508 619 0.98 0.96 1.05 12.99 17.93 0202 Meat of bovine, frozen…………………………………. 408 706 614 0.91 1.33 1.04 42.21 -14.98 Others……………………………………………...... 29,155 30,832 31,482 64.82 58.15 53.42 5.44 2.06
MAJOR IMPORTS PARTNERS Value in million US$ The major imports partners 2009 The major imports partners 2010 The major imports partners 2011 Partners Value % Partners Value % Partners Value % World 44,986 100.00 World 53,934 100.00 World 58,934 100.00
1 U.S.A. 501 4,748 10.56% 1 U.S.A. 501 4,961 9.36% 1 U.S.A. 501 6,303 10.69% 2 China 304 3,915 8.70% 2 China 304 4,902 9.24% 2 China 304 5,387 9.14% 3 Germany 212 3,606 8.02% 3 Germany 212 4,024 7.59% 3 Germany 212 3,734 6.34% 4 Italy 209 2,655 5.90% 4 Italy 209 2,962 5.59% 4 Italy 209 3,000 5.09% 5 Turkey 108 2,350 5.22% 5 KSA 5 2,120 4% 5 Kuwait 13 2,785 4.73% 6 KSA 5 2,017 4.48% 6 South Korea 322 1,906 3.59% 6 Turkey 108 2,583 4.38% 7 France 214 1,600 3.56% 7 France 214 1,886 3.56% 7 KSA 5 2,528 4.29% 8 Russia 114 1,551 3.45% 8 Turkey 108 1,880 3.55% 8 Russia114 2,150 3.65% 9 Japan 309 1,438 3.20% 9 Russia 114 1,835 3.46% 9 Brazil 705 2,148 3.64% 10 Ukraine 118 1,340 2.98% 10 Brazil 705 1,736 3.27% 10 France 214 1,958 3.32% 11 India 307 1,259 2.80% 11 Ukraine 118 1,625 3.06% 11 Ukraine 118 1,801 3.06% 12 South Korea 322 1,241 2.76% 12 India 307 1,559 2.94% 12 South Korea 322 1,658 2.81% 13 Brazil 705 1,236 2.75% 13 Kuwait 13 1,524 2.87% 13 Netherlands 216 1,630 2.77% 14 Kuwait 13 1,152 2.56% 14 Japan 309 1,440 2.72% 14 Argentina 701 1,573 2.67% 15 UK 207 984 2.19% 15 UK 207 1,284 2.42% 15 India 307 1,538 2.61% 16 Netherlands 216 901 2.00% 16 Malta 215 1,054 1.99% 16 Japan 309 1,312 2.23% 17 Spain 201 822 1.83% 17 Argentina 701 888 1.68% 17 Belgium 210 1,292 2.19% 18 Belgium 210 662 1.47% 18 Belgium 210 862 1.63% 18 UK 207 1,174 1.99% 19 European Comm. 221 642 1.43% 19 Spain 201 848 1.60% 19 Spain 201 1,049 1.78% 20 Sweden 204 586 1.30% 20 Netherlands 216 832 1.57% 20 Indonesia 310 851 1.44% 21 Thailand 318 556 1.20% 22 Thailand 318 749 1.14% 25 Thailand 318 651 1.1%
18 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
SPECIAL FOCUS (Thailand)
TOP EGYPTIAN IMPORTS FROM THAILAND 2010& 2011 Value Million % from Growth No. Code Description US$ Total Rate% 2010 2011 2010 2011 1. 1604140010 Tunas prepared or preserved 83.45 92.53 11.14 14.21 9.81 2. 8704219010 Vehicles transporting goods 94.53 80.97 12.62 12.44 -16.75 3. 4011200090 Pneumatic tires, pickup 31.36 44.2 4.19 6.79 29.05 4. 8529909090 Parts of projectors 26.37 26.84 3.52 4.12 1.75 5. 7411290000 Copper tubes and pipes 17.24 18.78 2.30 2.88 8.20 6. 4001290010 Natural rubber 22.29 17.97 2.98 2.76 -24.04 7. 8708290090 Parts and accessories of bodies 27.08 17.55 3.62 2.7 -54.30 8. 8704219030 Vehicles transporting goods / persons 24.33 14.68 3.25 2.25 -65.74 9. 4011100000 Pneumatic tires, motor cars 10.08 13.14 1.35 2.02 23.29 10. 5402491000 Synthetic filament yarn 8.26 12.48 1.10 1.92 33.81 Others 404.01 311.86 53.94 47.9 -29.55 Total 749.00 651 100.00 100 -15.05
Egypt Trade: Exports Egypt’s 2011 exports trade grossed over US$30.61 billion, a 10.69% surge from the previous year’s level.
Oil export is central to the Egyptian economy. Egypt produces 630,600 barrels of oil a day, and exports 155,200 barrels per day, approximately. However, the country has huge oil reserves, 37 billion barrels proven and potentially more in uncharted areas, which can act as fuel for the economy for coming decades.
Apart from crude oil and petroleum products, the country also exports metal products, cotton, textiles and chemicals. Before World War II, cotton made up 90% of Egypt's exports, while cotton textiles had grown to 16% of exports by 1970. By 1985, however, oil had come to dominate trade, making up around 80% of exports.
EXPORTS Value million US$ TOP 20 EXPORTS 2009-2001 HS Value million US$ Market Share Change % 4-digit heading of Harmonized System code 2009 2010 2011 2009 2010 2011 2010 2011 All Commodities 24,270 27,334 30,607 100.00 100.00 100.00 11.21 10.69 2710 Petroleum Oils and Oils not crude……………………... 2,066 2,962 3,506 8.51 10.84 11.45 30.25 -18.37 2709 Petroleum Oils and Oils crude…………………………. 1,570 1,777 3,013 6.47 6.50 9.84 11.65 -69.56 2711 Petroleum gases and other gaseous hydrocarbons……... 2,417 2,266 2,001 9.96 8.29 6.54 -6.66 11.69 7108 Gold…………………………………………………….. 970 1,048 1,701 4.00 3.83 5.56 7.44 -62.31 3102 Fertilizers………………………………………………. 1,083 1,119 1,283 4.46 4.09 4.19 3.22 -14.66 8544 Insulated Wire, Cable, Electric Conductors……………. 435 621 910 1.79 2.27 2.97 29.95 -46.54 0805 Citrus Fruits…………………………………………….. 540 537 572 2.22 1.96 1.87 -0.56 -6.52 7409 Copper Plates, Sheets and Strip………………………... 528 637 498 2.18 2.33 1.63 17.11 21.82 0406 Cheese And Curd………………………………………. 425 494 480 1.75 1.81 1.57 13.97 2.83 7208 Flat-Rolled Products of Iron or Steel…………………... 308 531 448 1.27 1.94 1.46 42.00 15.63 5701 Carpet and other flooring coverings……………………. 260 348 380 1.07 1.27 1.24 25.29 8.42 3817 Mixed alkylbenzenes & alkylnaphthalenes…………….. 98 232 346 0.40 0.85 1.13 57.76 32.95 4818 Toilet paper and similar paper…………………………. 213 260 326 0.88 0.95 1.07 18.08 20.25 6203 Suites, ensembles, jackets, trousers……………………. 293 380 310 1.21 1.39 1.01 22.89 -22.58 2814 Ammonia, anhydrous…………………………………... 125 264 302 0.52 0.97 0.99 52.65 12.58 2803 Carbon………………………………………………….. 175 249 296 0.72 0.91 0.97 29.72 15.88 6109 T-shirts and other vests………………………………… 318 268 288 1.31 0.98 0.94 -18.66 6.94 2716 Electrical energy……………………………………….. 108 109 281 0.44 0.40 0.92 0.92 61.21 5201 Cotton, not carded or combed...... ……………………... 89 262 266 0.37 0.96 0.87 66.03 1.50 9403 Other furniture and parts thereof……………………….. 257 224 264 1.06 0.82 0.86 -14.73 15.15 Others……………………………………………...... 11,992 12,746 13,136 49.41 46.63 42.92 5.92 2.97
19 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
MAJOR EXPORTS PARTNERS Value in million US$ The major exports partners 2009 The major exporters partners 2010 The major exporters partners 2011 Partners Value % Partners Value % Partners Value % World 24,270 100.00 World 27,334 100.00 World 30,607 100.00
1 U.S.A. 501 1,614 6.65% 1 Italy 209 2,235 8.18% 1 Italy 209 2,667 8.71% 2 Spain 201 1,590 6.55% 2 U.S.A. 501 1,691 6.19% 2 India 307 2,248 7.35% 3 Italy 209 1,587 6.54% 3 KSA 5 1,677 6.14% 3 KSA 5 1,882 6.15% 4 India 307 1,457 6% 4 Spain 201 1,664 6.09% 4 U.S.A. 501 1,596 5.21% 5 KSA 5 1,383 5.70% 5 India 307 1,269 4.64% 5 Turkey 108 1,512 4.94% 6 Libya 11 1,009 4.16% 6 Libya 11 1,210 4.43% 6 Spain 201 1,290 4.21% 7 China 304 976 4.02% 7 Turkey 108 1,005 3.68% 7 France 214 1,281 4.18% 8 Jordan 2 940 3.87% 8 Foreign Ships 901 948 3.47% 8 Foreign Ships 901 1,114 3.64% 9 UK 207 869 3.58% 9 France 214 930 3.40% 9 South Africa 401 994 3.25% 10 Syria 1 844 3.48% 10 Syria 1 827 3.02% 10 UK 207 961 3.14% 11 Switzerland 213 786 3.24% 11 UK 207 819 3% 11 Lebanon 10 937 3.06% 12 Turkey 108 706 2.91% 12 Jordan 2 739 2.70% 12 Jordan 2 803 2.62% 13 No Response 996 700 2.88% 13 Sudan 6 679 2.48% 13 UAE 328 795 2.60% 14 France 214 664 2.74% 14 UAE 328 642 2.35% 14 Germany 212 770 2.52% 15 Foreign Ships 901 654 2.69% 15 Netherlands 216 585 2.14% 15 Netherlands 216 698 2.28% 16 UAE 328 584 2.41% 16 Germany 212 584 2.14% 16 Syria 1 636 2.08% 17 Sudan 6 561 2.31% 17 South Korea 322 539 1.97% 17 China 304 603 1.97% 18 Netherlands 216 500 2.06% 18 Lebanon 10 535 1.96% 18 Belgium 210 564 1.84% 19 Germany 212 462 1.90% 19 China 304 454 1.66% 19 Libya 11 553 1.81% 20 Lebanon 10 451 1.86% 20 Iraq 4 418 1.53% 20 Sudan 6 510 1.67% 44 Thailand 318 65 0.27% 22 Thailand 318 24 0.09% 25 Thailand 318 17 0.06%
EU and the US are the biggest exporting markets for Egyptian oil and other products. Italy has the largest share of the Egyptian export pie, accounting for 8.71% of the total volume. It is followed by the India (7.35%), KSA (5.21%), USA (5.21%), Turkey (4.94%), Spain (4.21%), and France (4.21%)
Export Development Strategy
Egypt has an anticipated growing export potential in a large number of sectors due to the competitive advantage in many manufacturing industries and it's lucrative geographical location. The export potential is as well vivid in numerous service sectors including commercial services, especially tourism, transportation, business services and professional services.
It is of paramount importance to pinpoint that the Egyptian trade partners are equally highly diversified. The major trade partners include the EU and the USA with shares exceeding 30% and 10% respectively of total Egyptian exports. Other trade partners include South East Asia and Arab Countries. Trade with other developing countries such as those belonging to the African continent has vastly increased during the last period.
The Egyptian government’s clear vision is focused on the future of its exports and is on its comparative and competitive advantages. The ―Egyptian Exports Development Strategy‖ documents the government’s identified plan to achieve its goal of enhancing and promoting the Egyptian exports during the coming decade. Impediments preventing exports from flourishing were transparently and objectively addressed and, constructive systems to mitigate such impediments have been initiated.
Ministry of Foreign Trade issued a new law no.55 for the year 2002. This law stimulates the competition of the Egyptian products by resolving the impediments facing the Egyptian Exports. It focused on financing the research, marketing and training centers and facilitating
20 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile the communication between the Egyptian exporters and their counterparts in foreign markets. The new law supports cost efficiency for exporting to ensure fair competitiveness for the Egyptian Exports in global markets.
Additionally, law no. 1283 for the year 2002 issued by the Prime Minister concerning approved the establishment of Ministerial Committee to enhance the competitive ability of the Egyptian Exports. This committee includes Minister of the Agriculture, Minister of Foreign Trade, Minister of Industries and Promoting Technologies, Minister of Finance, Minister of Transportation and Minister of Civil Aviation. This law entails resolving all export impediments through concerned members of committee.
Moreover, a new law is being drafted to unify different customs system like Tax Rebate, Temporary Release and Drawback System in one system to facilitate for exporters their reclamation of previously paid customs on raw materials used in manufacturing products for Exports.
SPECIAL FOCUS (Thailand)
TOP EGYPTIAN EXPORTS TO THAIALND 2011 – 2010 Value Million % from Growth No. Code Description US$ Total Rate% 2010 2011 2011 2010 1. 5201000090 Cotton not carded or combed, ginned 6.54 8.89 27.25 52.29 26.43 2. 5503300000 Synthetic fibers 0 1.86 0.00 10.94 100.00 3. 8438200000 Machinery 0 0.62 0.00 3.65 100.00 4. 5205440000 Cotton yarn 1.01 0.53 4.21 3.12 -90.57 5. 5205480000 Cotton yarn 0 0.51 0.00 3.00 100.00 6. 7013910000 Glassware of lead crystal 10.85 0.42 45.21 2.47 -2483.33 7. 8506900010 Parts of primary cells/batteries 0 0.37 0.00 2.18 100.00 8. 7801990000 Unwrought lead 0.07 0.32 0.29 1.88 78.13 9. 4104191000 Hides and skins of bovine 0.25 0.26 1.04 1.53 3.85 10. 3909401000 Phenolic moulding compounds 0.18 0.23 0.75 1.35 -27.78 Others 5.1 11.88 21.25 69.88 57.07 Total 24.00 17.00 100.00 100.00 -41.18
Transport and Communication Transportation facilities in Egypt are centered in Cairo and largely follow the pattern of settlement along the Nile. The main line of the nation's 5,500-kilometer (3,400-mi.) railway network runs from Alexandria to Aswan and the Suez Canal. The well-maintained road network has expanded rapidly to over 47,500 kilometers (29,515 mi.), covering the Nile Valley and Delta, Mediterranean and Red Sea coasts, the Sinai, and the Western oases.
Egypt Air provides reliable domestic air service to major tourist destinations from its Cairo hub, in addition to overseas routes. As a recently-joined member of the Star Alliance, government-owned Egypt Air is expanding its air fleet and its international routes, in keeping with the Government of Egypt’s overall vision of Egypt as a growing and increasingly key regional transportation hub. The Nile River system (about 1,000 km. or 620 mi.) and the principal canals (1,600 km. almost 1,000 mi.) are important locally for transportation. The Suez Canal is a major waterway for global and regional commerce and navigation, linking the Mediterranean and Red Seas. Major ports are Alexandria, Port Said, the East Port Said container terminal and Damietta on the Mediterranean, and Ain El Sukhna, Suez and Safraga on the Red Sea, with major infrastructure and capacity modernizations and upgrades ongoing since 2008 in most of these ports.
Egypt has long been the cultural and informational center of the Arab world, and Cairo is the
21 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile region's largest publishing and broadcasting center. There are tens of daily newspapers with a total circulation of more than 4 million, and a number of monthly newspapers, magazines, and journals. Daily and weekly newspapers are a mix of independent, political party, and pro- government publications, and these papers conduct a lively, often highly partisan, debate on public issues. Recently, online publications have been on the rise, along with the online versions of major independent publications. Egyptian Radio and Television Union (ERTU) is the state-run entity that controls Egyptian TV (ETV), Nile TV, and Nile News, as well as the specialized channels (7 channels, including sports, culture, comedy, and children’s programming) and most radio frequencies in Egypt. ETV controls terrestrial (free-to-air) broadcasts throughout Egypt, broadcasting Channel 1 and Channel 2 nationwide, as well as six regional channels and depends heavily on commercial revenue. ETV sells its specially produced programs and soap operas to the entire Arab world. In addition to Egyptian programming, Al Arabia, Al Jazeera, the Middle East Broadcast Company, a Saudi television station transmitting from London (MBC), Lebanese networks (Future and LBC), Arab Radio and Television (ART), and other Gulf stations as well as Western networks such as CNN, BBC, Fox News, and Al Hurra provide access to more international programs to Egyptians who own satellite receivers. NileSat, one of the three main providers of satellite TV to the region, is effectively controlled by ERTU and hosts a wide variety of channels.
Beginning in 2001, private satellite TV and radio has entered the Egyptian media marketplace. Three new private satellite-based TV stations were launched in November 2001, marking a significant change in Egyptian government policy. Dream TV 1 and 2 produce talk shows, cultural programming, broadcast contemporary video clips and films featuring Arab and international actors, as well as soap operas; another private station, El-Mehwar, focuses on business and general news. Other new independent TV stations include Al Hayat TV, O TV and ONTV (owned by the Orascom conglomerate), El Saa and Modern TV. These private channels also transmit on NileSat. Recently, there has been a proliferation of religious themed channels catering to Salafis (ultra-conservative Muslims).
Radio in Egypt is almost all government-controlled and uses 44 short-wave frequencies, 18 medium-wave stations, and four FM stations. There are seven regional radio stations covering the country. Egyptian Radio transmits 60 hours daily overseas in 33 languages and three hundred hours daily within Egypt. In 2000, Radio Cairo introduced new specialized (thematic) channels on its FM station. These stations, known as Radio El Nile, include news and music. Both traditional journalists and bloggers played critical roles reporting on the events of the January 2011 Revolution. Activists also organized heavily through social media tools such as Facebook and Twitter. In the revolution’s early days, the government blocked access to social networking websites, followed by a near complete shutdown of Internet and cell phone access across the country for several days, before it was finally restored.
Communications:
Telephones - main 9.618 million (2011) lines in use: country comparison to the world: 22 Telephones - mobile 70.661 million (2011) cellular: country comparison to the world: 16 general assessment: underwent extensive upgrading during 1990s; principal centers at Alexandria, Cairo, Al Mansurah, Ismailia, Suez, Telephone system: and Tanta are connected by coaxial cable and microwave radio relay domestic: largest fixed-line system in the region; as of 2010 there were three mobile-cellular networks with a total of more than 70
22 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
million subscribers international: country code - 20; landing point for Aletar, the SEA- ME-WE-3 and SEA-ME-WE-4 submarine cable networks, Link Around the Globe (FLAG) Falcon and FLAG FEA; satellite earth stations - 4 (2 Intelsat - Atlantic Ocean and Indian Ocean, 1 Arabsat, and 1 Inmarsat); tropospheric scatter to Sudan; microwave radio relay to Israel; a participant in Medarabtel (2010) mix of state-run and private broadcast media; state-run TV operates 2 national and 6 regional terrestrial networks as well as a few satellite channels; about 20 private satellite channels and a large number of Broadcast media: Arabic satellite channels are available via subscription; state-run radio operates about 70 stations belonging to 8 networks; 2 privately- owned radio stations operational (2008) Internet country .eg code: 200,336 (2011) Internet hosts: country comparison to the world: 70 20.136 million (2010) Internet users: country comparison to the world: 21
Transportation:
86 (2011) Airports: country comparison to the world: 66 total: 73 over 3,047 m: 15 Airports - with 2,438 to 3,047 m: 36 paved runways: 1,524 to 2,437 m: 15 914 to 1,523 m: 2 under 914 m: 5 (2010) total: 13 2,438 to 3,047 m: 1 Airports - with 1,524 to 2,437 m: 3 unpaved runways: 914 to 1,523 m: 5 under 914 m: 4 (2010) Heliports: 6 (2010) condensate 320 km; condensate/gas 13 km; gas 6,628 km; liquid Pipelines: petroleum gas 956 km; oil 4,332 km; oil/gas/water 3 km; refined products 895 km; water 13 km (2010) total: 5,083 km Railways: country comparison to the world: 34 standard gauge: 5,083 km 1.435-m gauge (62 km electrified) (2010) total: 65,050 km country comparison to the world: 70 Roadways: paved: 47,500 km unpaved: 17,550 km (2009) 3,500 km (includes the Nile River, Lake Nasser, Alexandria-Cairo Waterway, and numerous smaller canals in Nile Delta; the Suez Waterways: Canal (193.5 km including approaches) is navigable by oceangoing vessels drawing up to 17.68 m) (2010) country comparison to the world: 29 total: 66 Merchant marine: country comparison to the world: 64
23 Thai Trade Center, Cairo ٍ Sherif Yehya Egypt Country Profile
by type: bulk carrier 11, cargo 24, container 3, passenger/cargo 7, petroleum tanker 12, roll on/roll off 9 foreign-owned: 13 (Denmark 1, France 1, Greece 8, Jordan 2, Lebanon 1) registered in other countries: 52 (Cambodia 12, Cook Islands 1, Georgia 11, Honduras 2, Malta 1, Marshall Islands 1, Moldova 5, Panama 11, Saint Vincent and the Grenadines 4, Saudi Arabia 1, Sierra Leone 2, unknown 1) (2010) Ayn Sukhnah, Alexandria, Damietta, El Dekheila, Port Said, Sidi Ports and terminals: Kurayr, Suez
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