Egypt’s path to economic recovery may take longer than expected

by MMC
0 comment

Since 2020, many African countries have struggled to return to pre-pandemic times. The COVID-19 pandemic has had a significant impact on economic activities, leading to widespread job losses due to government-imposed restrictions, and fear of the virus has prompted people to stay home and constrained businesses to close their doors.

The economic downturn was further aggravated by a global energy crisis, which manifested itself unexpectedly as a result of increased demand for oil and gas in the international market. The crisis emerged amid a surprise oil price war between Russia and Saudi Arabia, the world’s second and third largest oil producers, which culminated in a dramatic escalation of tensions in the first quarter of 2020. Mostly African economies, such as Egypt, have It has been difficult to return to pre-pandemic times due to multiple global market shocks. Currently, the Egyptian economy is grappling with significant challenges that have persisted since 2020.

As Africa’s second-largest economy, the country has struggled with various economic shocks, leading to persistent problems such as inflation, widespread job losses, currency devaluation and a notable decline in living standards. . The country has a particularly diverse economic landscape, with key sectors such as agriculture, media, oil imports facilitated by the Suez Canal, natural gas and tourism. However, the COVID-19 pandemic has severely impacted these sectors, disrupting supply chains, dampening demand and severely affecting revenue flows.

The pandemic has further shaken the country’s agricultural sector, causing disruptions in production and distribution due to containment measures and labor shortages. The media industry has failed to generate advertising revenue. Its Suez Canal saw fluctuations in traffic volume and revenue as the structure of international trade changed in response to the global shock. Aside from the COVID-19 pandemic, factors such as the Russo-Ukrainian war triggered an unexpected food crisis in Egypt, which was heavily dependent on both countries for its wheat imports. About 60 percent of Egyptian wheat came from Russia and 22 percent from Ukraine.

Suez Canal a troubled lifeline for Egypt

The Suez Canal, spanning 193.30 kilometers, is an artificial waterway at sea level in Egypt. It connects the Mediterranean Sea to the Red Sea via the Isthmus of Suez, providing a vital trade route between Europe and Asia.

Egypt currently faces a significant challenge arising from the ongoing conflict between Israel and Hamas, the repercussions of which extend across the Middle East, particularly in the Red Sea region. As of 2020, Egypt has relied heavily on the $10 billion annual revenue generated by the Suez Canal, positioning it as a key artery of global trade and an integral part of its economy.

Recent reports According to local media, President Abdel-Fattah El-Sisi acknowledges a notable drop in Suez Canal revenues of between 40 and 50 percent compared to the previous year. He attributes the decline to Houthi attacks affecting shipping in the Red Sea. Additionally, authorities revealed in January that Suez Canal revenues had fallen 30% year-to-date compared to the same period in 2023.

The refugee crisis, a thorn in the side

For years, Egypt has hosted around half a million registered refugees and asylum seekers of 62 different nationalities, as reported by the United Nations Refugee Agency. As of October 2023, Sudanese nationals made up the largest group, followed by Syrians. Notable countries of origin also include South Sudan, Eritrea, Ethiopia, Yemen, Somalia and Iraq.

Tensions between Israel and Hamas in the Gaza Strip have led to an increased flow of refugees seeking refuge in Egypt, the only viable option. However, Egypt has concerns about the security implications of welcoming these Palestinian refugees within its borders. Some fear that militants could potentially infiltrate into Egypt from Gaza. Additionally, there is growing concern that if Hamas launched attacks against Israel from the Sinai region, this could provoke retaliatory strikes from Israel on Egyptian territory. The ongoing war in the Gaza Strip and the multiple challenges it poses are further straining Egypt and hampering its path to economic recovery.

You may also like

Leave a Comment

afriqaa (1)

The news website dedicated to showcasing Africa news is a valuable platform that offers a diverse and comprehensive look into the continent's latest developments. Covering everything from politics and economics to culture and wildlife conservation

Newsletter Subscribe

Follow Us

Facebook Twitter Instagram Linkedin Youtube Email

u00a92022 All Right Reserved. Designed and Developed by PenciDesign