In 2011, a populist revolution toppled Egypt’s long-standing regime. The country has a new leader and a new constitution, but the political situation remains unstable. That hampers its ability to address lingering economic troubles. Growth has slowed to 2.2%, according to a recent report by the World Bank. Unemployment was at 13% at the end of 2012, with 3.5 million people out of work. A fuel shortage and related jump in food prices has worsened the situation. Currency reserves have declined steeply, and the country’s deficit stands near 11% of the gross domestic product.
The World Bank says educational upgrades and investment are needed to get the Egyptian economy on track. But so far, country leaders have not accepted an International Monetary Fund package that would bring aid while imposing reforms and austerity measures.
Business travel industry insight
Corporate travel programs are consolidating, driven by multinational corporations with regional operations based in Egypt. While many companies continue to price shop with multiple agencies in pursuit of the lowest rates, multinationals are fostering a shift to a value-for-money approach that gives more weight to quality of service. The growing presence of these international companies also is driving wider adoption of global business travel standards among Egyptian companies.
- Egypt’s central location makes it an attractive base for global companies seeking to establish a regional base of operations.
- The country’s infrastructure and educational needs hold business potential for multinational companies positioned to bid on contracts funded by international agencies.
- Economic improvement would rapidly unleash considerable demand from Egypt’s young and growing population.
- The transition to democracy is likely to improve business transparency and reduce corruption.
- Egypt’s fragile security situation hampers business travel and tourism, the latter of which once made up 12% of Egypt’s GDP.
- The value of Egypt’s currency has eroded by 10% since December, which has caused a jump in inflation to 8%.
- The government’s hesitation to accept IMF aid has slowed the progress of broad economic reform.
- Politicians are in a holding pattern as they await parliamentary elections, scheduled in the fall; economists warn the delay will further harm the country’s weakened economy.