Egypt Economic Monitor, November 2020 : From Crisis to Economic Transformation - Unlocking Egypt’s Productivity and Job-Creation Potential
The COVID-19 (coronavirus) pandemic is causing the most severe global health and economic crisis in at least seven decades. In Egypt, the disruptions caused by the pandemic started in March 2020, and has since interrupted a period of macroeconomic...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/256581604587810889/Egypt-Economic-Monitor-From-Crisis-to-Economic-Transformation-Unlocking-Egypt-s-Productivity-and-Job-Creation-Potential http://hdl.handle.net/10986/34785 |
| Summary: | The COVID-19 (coronavirus) pandemic is
causing the most severe global health and economic crisis in
at least seven decades. In Egypt, the disruptions caused by
the pandemic started in March 2020, and has since
interrupted a period of macroeconomic stability,
characterized by relatively high growth, improved fiscal
accounts, and a comfortable level of foreign reserves. Yet,
the pandemic also hit as longstanding challenges continued
to persist, notably the government’s elevated debt-to-GDP
ratio (despite its significant reduction in recent years),
sluggish revenue-mobilization and the below-potential
performance of non-oil merchandise exports and non-oil FDI.
The fiscal, monetary and energy sector reforms implemented
in recent years, along with the emergency measures
undertaken by authorities in response to the COVID-19 crisis
are so far helping Egypt weather the shock. Indeed, average
real growth has remained positive during FY2019/20 and
foreign reserves continue to be rather ample. Nevertheless,
the COVID-19 pandemic has inevitably caused job and income
losses, posing additional strains on Egyptian households’
livelihoods, and is thus exacerbating the long-standing
challenge of job-creation in Egypt, notably in the formal
private sector. The in-focus chapter of this report is
therefore dedicated to the topic of jobs and economic
transformation. The analysis of this chapter shows that the
economic transformation process has been slow-moving in
Egypt, with employment shares increasing either in low
value-added sectors, or in sectors that have experienced a
decline in productivity (value-added per worker). Hence, the
Egyptian economy has not been able to generate high-earning
jobs, at scale. Going forward, for businesses to expand and
create sufficient and high-quality employment opportunities,
a three-pronged approach will be necessary: (i) Sustaining
macroeconomic stability and overall policy predictability
whilst incentivizing domestic savings to finance
investments. (ii) Getting the enabling environment right to
create attractive opportunities for domestic and foreign
investments. (iii) Upgrading human capital and firm
capabilities to fast-track the economic transformation
process in Egypt and to strengthen the country’s resilience
against such severe shocks. |
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