The economy depends mainly on agriculture, media, petroleum exports, exports of natural gas and tourism. The completion of the Aswan High Dam in 1970 and the resultant Lake Nasser have altered the time-honoured place of the Nile River in the agriculture and ecology of Egypt. A rapidly growing population, limited arable land, and dependence on the Nile all continue to overtax resources and stress the economy.
The government has invested in communications and physical infrastructure. Egypt has received US foreign aid (since 1979, an average of $2.2 billion per year) and is the third-largest recipient of such funds from the US following the Iraq war. Its main revenues however come from tourism as well as traffic that goes through the Suez Canal.
Egypt has a developed energy market based on coal, oil, natural gas and hydro power. Substantial coal deposits are in the northeast Sinai, and are mined at the rate of about 600,000 metric tons per year. Oil and gas are produced in the western desert regions, the Gulf of Suez, and the Nile Delta. Egypt has huge reserves of gas, estimated at 1,940 cu km (470 cu mi), and LNG is exported to many countries.
Economic conditions have started to improve considerably after a period of stagnation from the adoption of more liberal economic policies by the Government, as well as increased revenues from tourism and a booming stock market. Some major economic reforms taken by the new government since 2003 include a dramatic slashing of customs and tariffs. A new taxation law implemented in 2005 decreased corporate taxes from 40% to the current 20%, resulting in a stated 100% increase in tax revenue by the year 2006.
Foreign direct investment (FDI) into Egypt has increased considerably in the past few years, exceeding $6 billion in 2006, due to the recent economic liberalisation and privatisation measures taken by minister of investment Mahmoud Mohieddin.
Although one of the main obstacles still facing the Egyptian economy is the trickle down of the wealth to the average population, many Egyptians criticise their Government for higher prices of basic goods while their standards of living or purchasing power remains relatively stagnant. Corruption is often cited by Egyptians as the main impediment to further economic growth. The Government promises major reconstruction of the country's infrastructure, using money paid for the newly acquired third mobile licence ($3 billion) by Etisalat.
Egypt's most prominent multinational companies are the Orascom Group and Raya Contact Center. The IT sector has expanded rapidly in the past few years, with many start-ups selling outsourcing services to North America and Europe, operating with companies such as Microsoft, Oracle and other major corporations, as well as many small and medium enterprises. Some of these companies are the Xceed Contact Center, Raya, E Group Connections and C3. The sector has been stimulated by new Egyptian entrepreneurs with Government encouragement.
An estimated 2.7 million Egyptians abroad contribute actively to the development of their country through remittances ($7.8 billion in 2009), as well as circulation of human and social capital and investment.
A youth protest demanding more political freedoms, fighting corruption and delivering improved living standards forced President Mubarak to step down on 11 February 2011. After the revolution Egypt’s foreign exchange reserves fell from $36 billion in December 2010 to only $16.3 billion in January 2012, also in February 2012 Standard & Poor’s rating agency lowered the Egypt’s credit rating from B+ to B in the long term.
See more information on the next page... (next)