Egypt’s current account deficit surged dramatically in the 2023/24 fiscal year, ballooning from $4.7 billion to $20.8 billion, according to data from the Central Bank of Egypt.
The stark rise stems from worsening trade imbalances and a sharp decline in Suez Canal revenue, further straining Egypt’s economic landscape.
As the country navigates these challenges, Prime Minister Mostafa Madbouly has introduced an ambitious plan to create 8 million jobs by 2030, aiming to stabilize the economy and ensure long-term sustainability.
Suez Canal revenues plummet by 25%
A critical blow to Egypt’s economy came from the steep decline in Suez Canal revenues, which dropped to $6.6 billion from $8.8 billion, a 25% year-over-year decrease.
The disruption was especially pronounced in the latter half of the fiscal year when canal revenues plummeted by 61.7% to $1.8 billion.
The Red Sea’s increasing tensions, exacerbated by Houthi rebel attacks on vessels amid the Israel-Hamas conflict, have been cited as the primary cause of this revenue shortfall.
The Suez Canal, a critical artery for global trade and a vital source of income for Egypt saw these interruptions further deepen the country’s current account deficit.
With maritime disruptions on the rise, the Egyptian government is under pressure to implement economic reforms to offset the fallout and stabilize the economy.
Egypt FDI inflows up to $46.1 billion
Despite the decline in canal revenues, Egypt saw a significant boost in foreign direct investment (FDI) inflows, which surged to $46.1 billion from $10 billion in the previous year.
This influx of foreign capital reflects continued investor confidence in Egypt’s potential, particularly in sectors like energy, infrastructure, and technology.
However, other areas of the economy showed mixed performance.
Remittances from Egyptians working abroad, a critical source of foreign exchange, dipped slightly to $21.9 billion from $22.1 billion.
On a more positive note, tourism revenues increased modestly to $14.4 billion from $13.6 billion, providing some relief to the struggling economy.
Egypt job creation plan: 8 million jobs by 2030?
In response to Egypt’s mounting economic challenges, Prime Minister Mostafa Madbouly has announced an ambitious job creation initiative aimed at generating 8 million new jobs by 2030.
Speaking at the 48th Annual Meeting of Arab Central Banks and Monetary Institutions Governors, Madbouly emphasized the government’s commitment to long-term economic reform and resilience.
Madbouly highlighted the government’s previous success in managing crises such as the COVID-19 pandemic and ongoing geopolitical tensions.
Between 2020 and 2023, Egypt maintained an average annual growth rate of 4.3%, demonstrating resilience in the face of global economic turbulence.
Central to this job creation strategy are initiatives like the Golden License, which aims to streamline the investment process across various sectors to attract foreign capital.
Additionally, the Haya Karima (Decent Life) initiative focuses on improving living standards in rural areas and promoting employment through infrastructure and industrial projects.
The role of AI in Egypt’s economic future
As part of the broader economic reform strategy, Prime Minister Madbouly also addressed the transformative role of artificial intelligence (AI) in shaping Egypt’s future labor market.
He underscored the importance of adopting AI-friendly policies that can both spur job creation and support innovation.
With the global workforce increasingly impacted by AI and automation, Madbouly stressed that Egypt must adapt to these changes to remain competitive.
The government aims to position Egypt as a leader in the digital economy by fostering tech-driven industries and creating new opportunities for its growing population.
As the country continues to navigate these economic challenges, its ability to attract investment, create jobs, and implement effective reforms will be vital in shaping its economic future.
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