Egypt | Economy: Economic Liberalization Reforms

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Economy: Economic Liberalization Reforms

Economic reform in Egypt started in 1974 with the open door policy which attempted to convert our mode of production from one based on import substitution in an economy characterized by a huge public sector to an economy that is more private sector friendly with export oriented policies at its core.
Since 2004, the scope and depth of reform have vastly expanded and took root. The economy witnessed a clear transformation from the private sector friendly environment prevalent during the 1970s, 80's and 90's to a private sector reliant economic system.
Since implementing relevant pro-business economic reforms, the Egyptian economy has become one of the fastest growing among emerging markets. In contrast to a low of 3.2 percent in the 2002-2003 fiscal years, Egypt experienced GDP growth of 7.2 percent for the third year in a row till the first quarter of 2009.
Growth has been broad-based across manufacturing, the hydrocarbon sector, construction, services, tourism and agriculture, with the main drivers being private consumption and investment supported by relatively large inflows of FDI.
Since 2005, Egypt's annual GDP growth rates have outpaced averages for the newly industrialized Asian economies and the entire Middle East. Projections for 2009 beyond indicate that Egypt will sustain its position as one of the world's fastest growing economies.

Egypt was named the top regional reformer for 2009 and in the top ten globally in the annual World Bank publication Doing Business. This is the third year in a row that Egypt has been named the top regional reformer.
H.E. Mahmoud Mohieldin, the Minister of Investment in Egypt since 2004, was nominated a Young Global Leader of the World Economic Forum and a member of the Commission on Growth and Development in 2005.

The Central Bank of Egypt began a financial sector reform program in 2005 which has now entered its second stage. Smart decision making and carefully regulated liquidity levels during the initial reform period insured that Egyptian banks were insulated from the current global financial crisis. In addition, 65 percent of the Egyptian banking sector has been privatized.

Egypt's work force - at 24.8 million people - is the largest among Arab countries and the third largest in the Middle East and North African region.
Egypt's economic liberalization policies have led to a significant increase in investments, which has brought down unemployment in Egypt from 11.8 percent in 2005 to 8.6 percent in 2008.

The Minister of Trade and Industry, Rashid Mohamed Rashid, has taken an active role in encouraging export-oriented manufacturing. Under his watch, export revenues have increased by 50 percent.
In the past five years, the government has negotiated free-trade agreements and preferential trading arrangements with Arab States (Pan Arab Free Trade Area), COMESA (East and Southern Africa), the EU (Partnership Agreement) and Turkey.
In 2004, the Egyptian government negotiated a free trade agreement with Israel and the United States. The agreement created three Qualified Industrial Zones in Egypt; in Greater Cairo, Alexandria, and Port Said. According to the agreement, products that contain at least 11 percent Israeli components are granted duty-free access to markets in the United States.

Egypt has an open and flourishing stock market that ranks number two in the entire Middle East region, second only to Bahrain.
Egypt continues to receive significant levels of foreign direct investment (FDI). Its FDI reached nearly $20 billion in 2008, a 40 percent increase over the previous year.