14.10.2022, 12:55 53

The Second Largest Economy In Africa: Egypt

General Outlook and Opportunities

In Egypt, which is the largest economy in the African continent after Nigeria and the 35th largest economy in the world, there have been periods of disruption in the investment circumstances in the last 20 years due to political turmoil. Despite this, the Egyptian economy has 

grown by 4.5% in the last 5 years, including 2020, when the pandemic was most intense. Although the growth rate decreased to 3.5% in 2020, it was one of the rare countries that showed growth at that time. While the change is expected to decrease slightly to 2.8% in 2021, it is expected to grow over 5% in 2022 and 2023.

The economy's agriculture, hydrocarbons, manufacturing, tourism, and other service sectors constitute the main fields of activity. While the share of the services sector in the economy is just over 50%, the percentage of the industry is 35.6%, and the share of agriculture is 11%.

With a national income of over 400 billion dollars, low wages compared to its competitors at the global level, and a population of more than 100 million, the Egyptian economy has the potential to be used as a production base for export. Producers rely heavily on imported materials and often produce low-value-added goods, meaning that net non-hydrocarbon exports are still struggling to rise.

When the country's economy is supported with structural reforms, it will be able to reveal a tremendous economic potential. The hydrocarbon sector, in particular, shows good potential for further development. Stabilising macroeconomic conditions (such as the high budget deficit, foreign trade deficit and public debt stock reduction and improvement of the investment climate) will help attract more direct investment in non-hydrocarbon sectors.

Egypt's Foreign Trade

While Egypt's exports increased by 86%, from 22 billion dollars in 2015 to 41 billion dollars in 2021, its imports did not change much in the same period and remained in a narrow band of 74-80 billion dollars. In this period, the increase in exports of processed petroleum products, natural gas and gold was largely determinant.

The top 5 countries in Egypt’s exports (UAE, Saudi Arabia, Türkiye, USA and Italy) account for approximately one-third of the exports. On the import side, China ranks first with a share of 15%, followed by the USA with 6.7% and Saudi Arabia with a share of 6.3%. Türkiye is the third country where Egypt exports the most and the fifth country that imports the most.

While processed petroleum products, natural gas, gold and plastics constitute 40% of the total exports in Egypt, electrical appliances, fresh fruit, and fertilisers stand out as the sectors to which Egypt exports the most. On the import side, crude oil, electrical devices and machinery account for one-third of the total imports, followed by grain and automotive imports.

Egypt's trade policy targets have been determined following the "Egypt Vision 2030". Accordingly, the goal is to make Egypt a leading industrial economy in the MiddleEast and North Africa by 2025 and the central export hub for medium technology products. To this end, issues such as developing micro, small and medium-sized enterprises, promoting exports and rationalising imports, supporting 

creativity and innovation, saving energy, improving technical and vocational education, and improving the business environment are planned.

Outlook of Foreign Direct Investments

While the (net) foreign direct investment amount to Egypt was 11.5 billion dollars in 2007, it decreased to 5.8 billion dollars in 2020 due to the political turmoil disrupting the investment environment and the pandemic. However, in recent years, the country has started to increase its attractiveness

for investment again. With a total foreign direct investment amount of 38 billion dollars in 2018- 2020, Egypt ranks 45th in the world with a total foreign capital stock of 132 billion dollars in 2020.

As of 2020, Egypt ranks 20th with a share of 244 million dollars and 1% of Türkiye's total foreign direct investment stock, worth 44 billion dollars. Egypt ranks 44th with 25 million dollars in the total foreign direct investment stock worth 218 billion dollars coming to Türkiye from abroad.

Trade Relations between Türkiye and Egypt

Türkiye is a net exporter in trade with Egypt. While our export to Egypt was 3 billion dollars in 2015, it increased by 66% in 2021 to 5 billion dollars, while our imports increased from 1 billion dollars to 2 billion dollars in the same period. 

In 2021, Egypt's share in our total exports was 2%, and Egypt is the 15th country to which we export the most. The country's share in our total

imports is 0.81%, making it the 26th country from which we import the most.

While machinery, mechanical devices and tools, motor vehicles, iron and steel and mineral fuels and oils are at the forefront of our exports to Egypt, plastics and their products, fertilisers, organic chemicals, and electrical machinery and devices come to the fore in our imports from Egypt.

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