Egypt in economics

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Macro-economical concept applied in Egypt such as : unemployment rate, Economical political power, long run variables and stock market, role of the central bank all that and more you can see under the topic Egypt between black yesterday and welling tomorrow

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  • Take care of Seas, Rivers, Neighbor countries
  • Egypt in economics

    1. 1. HFWU (MBA International Management) SS2013Prof. Dr. Gerhard PfisterDr.Mohammed GhorabEgypt between Yesterday andTomorrow( Unemployment rate)
    2. 2. Aquatic Borders:Seas:1- Mediterranean Sea : from AtlanticOcean2- Red Sea: Indian OceanRivers1- Nile : comes from- White Nile (Great Lakes) fromCentral Africa (Rwanda & Burundicollected in lakevictoria, tanzania, uganda)2- Yellow Nile: Chad connecting toNile river valley3- Blue Nile source of fertile soilfrom lake Tana in Ethiopia joinedtogether to form the Nile river inSudan Khartoum- In Egypt : North of Cairo, the Nilesplits into two branches that feed
    3. 3. Introduction Egypts economy is the second largest in the Arabworld (after Saudi Arabia) The service sector is by the far the largest andfastest-growing economic sector and accounts foralmost 51 percent of GDP $537.8 billion (2012 est.) Country comparison to the world: 27
    4. 4. Some Facts about Egypt- Total Area 2012 1,002,450 km2387,048 sq miCurrency Pound 1 L.E = 0.11 Euro1 L.E = 0.143- Population 2013 estimate 91,000,000- Population belowpoverty line2005 20%- Labor force 2012 30 Milion (22 W.W)- GDP 2012 $537.8 billion- GDP - per capita (PPP) 2012 $6,600- GDP (officialexchange rate)(Nominal GDP)2012 $255 billion- GDP - real growth rate 2012 2%- GINI Index 2008 30.8 (Medium)- HIDI Index 2011 0.644 (Medium) 113
    5. 5. Religions & Human Rights95%6%0.50% 0Religions 2009MuslimsArthodoxJewishAtheist and BahaiUnknown Numbers although Government had accepted removingthe religion area from Atheist ID
    6. 6. GDP Composition by SectorAgriculture, 14.70%Industry, 37.40%Service, 47.90%GDP SectorsAgricultureIndustryService
    7. 7. Labor Force by OccupationAgriculture, 32%Industry, 17%Service, 51%Labor by Occupation 2011 from total 30 millionAgricultureIndustryService
    8. 8. Labor Force by Age0-14years, 32.30%15-24years, 18%25-54years, 38.30%55-64years, 6.60%65 years andover, 4.80%Age Structure 20130-14 years15-24 years25-54 years55-64 years65 years and over
    9. 9. Agricultural Products Cotton, rice, corn, wheat, beans, fruits, vegetables; cattle, water buffalo, sheep, goats Even though Arab land accounts for only 3percent of the countrys overall landarea, agriculture remains one of the mostimportant sectors of the economy, employingroughly 30-40 percent of the labor force but thenumber in this sector decrease steadily
    10. 10. Industries Concentrated in Cairo and the Nile delta. Textiles, foodprocessing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, lightmanufactures, Steel Production of petroleum and petroleum products 7 percent of GDP and providing a major source offoreign currency. Construction industry has become one of the fastest-growing sector in the economy Large part to huge government infrastructure andmodernization projects Increased as a result of the governments effortstowards privatization (The aim of the X Government)
    11. 11. Service Sector Revenue Telecommunication: Telephone, Broadcastmedia, Internet, Internet host Internet users in Egypt in 2012: 35 Million user Transport and Logistics & Shipping services: Airport, Suez-canal, Ports,( due to geographical territories: Red-sea, Mediterranean, Nileriver) Oracle Middle East, IT communication systems Tourism Trade Banking: West, Islamic Banking systems
    12. 12. Exports Crude oil and PetroleumProducts, Cotton, Textiles, Metalproducts, Chemicals, Processed Food Export Partners (2011) : Italy 8.7%, India 7.3%, Saudi Arabia 6.1%, US5.2%, Turkey 4.9%, Spain 4.2%, France 4.2%- General Agreement on Tariffs and Trade (GATT) 2004 (WTO) : Egypt, Israel, USA- It plays an important role in extension of Camp David Peace Treaty (17 September1978) for 30 years- between Egypt and Israel Export - Import
    13. 13. Imports Machinery andequipment, foodstuffs, chemicals, woodproducts, fuels Imports Partners (2011) : US 10.7%, China 9.1%, Germany 6.3%, Italy5.1%, Kuwait 4.7%, Turkey 4.4%, Saudi Arabia4.3%U.S Aids/ Camp David think about Marshallplan ; I’ll help you but you`llmove in the line that I draw for you
    14. 14. USA Export to Egypt in AgriculturalSector $9.7 billion
    15. 15. GDP Growth Rate2013 = 2% steady growth rate
    16. 16. Unemployment Rate 12% in 2011 – 12.5% in 2012 (Please consider the shadow economy which is very famous in Egypt and out of this calculations) Age: (2007) 15-24 years old: 24.8% Males: 17.2% Females: 47.9% Fertility rate decreases ; 2000 (3.6)- 2008 (3.0) – 2013 (2.5) Due to a high corruption and carcinogenic products andfertilizers that was used by our X-agriculture minister
    17. 17. Age/ Population / Gender:
    18. 18. Wealth Distribution Egyptian society is moderately unequal in terms ofincome distribution, with an estimated about 35% to40% of Egypts population earning less than theequivalent of $2 a day, while only around 2–3% maybe considered wealthy (Acc. European Standards forQuality of live)
    19. 19. Budget and Investment:2012 Revenues: $56.64 billion Expenditures: $83.24 billion Investment: 13.5% of GDP Taxes: 22.2% of GDP Budget Deficit: -10.4% of GDP Public Debt: 65,3% of GDP (31,6) External Debt: $380824 Million Total Governmental Debt: 1850766 Million L.E
    20. 20. Inflation Rate according to consumerprice Index2012 8.5%2011 10.2%Reserves of foreign exchange and gold$15.26 billion (31 December 2012 est.)
    21. 21. Two hard decision for the Centralbank1. Keep interest rate stable to encourage investmentsin this hard country situation2. Increasing the interest rate High price of the dollar against the pound recentlyconsidered one of the main factors behind the suddenrise in inflation indicators to reflect the increase in theprices of goods especially that the country’sdependence on import more of its commodities fromabroad Increasing the inflation rate and dollar exchange(Dollarization) Protect the Egyptian citizen income from decayingand loosing value
    22. 22. Decision : Increasing the interest rate but providing loans withappreciate interest rate (low) Control relative float exchange market so as not togive rise to chaos in the flotation (Float of theEgyptian pound ex.rate) The stability of the assets of the foreign exchangereserves The central bank pointed out - in a statement - that hewill raise the price of the main operations by 50 basispoints to reach 10.25% and raise the price of creditand debit by 75 basis points to 10.25% Raise the price of return on deposit and lending 50points basis or 0.5 percent to close 9.75 percent and10.75 percent, respectively
    23. 23. Interest Rate (Savings) For saving certificates (3 years) reaches 13.5% For yearly Certificates: 12% For saving bank account : 10.25 % For foreign bank notes: 3% Domestic deposited currency: 235 Milliard pound
    24. 24. Egypt suffering worst economiccrisis since 1930s Since the fall of Hosni Mubarak in 2011, Egypt hasexperienced a drastic fall in both foreign investmentand tourism revenues, followed by 60% drop in foreign exchange reserves, 3% drop in growth, and a rapid devaluation of theEgyptian pound. All this has led to mushrooming food prices, ballooningunemployment and a shortage of fuel and cooking gas– causing Egypts worst crisis.
    25. 25. Egypt Economic Crisis1- Rising the food price2- lose of control3- increase the rate of unemployment4- Insufficent security5- Egypt inflation set to climb to 10.9%, says IMFInternational Monetary Fund6- IMF cuts 2013 growth forecast for Egypt economyto 2%
    26. 26. Political instability kills the chances ofinvestement and economic stability
    27. 27. Unemployment Rate
    28. 28. Unemployment Problem in EgyptThe problem of youth unemployment has beengetting worse for several years. But there are at lastsome reasons for hope.Government is trying to address the mismatchbetween education and the labor market. Companiesare beginning to take more responsibility for investingin the young. And technology is helping democratizeeducation and training.The world has a real chance of introducing aneducation-and-training revolution worthy of the scale ofthe problem. (vocational training school)
    29. 29. Islamic Bond The Sukuk, or Islamic bond, is now being held up as that something, with somein the government touting them as a savior of the Egypt’s economy.Bankers, analysts and investors appear less excited. More corporate issuance and the entry of retail investors can power sukukmarket ahead Public Sukuk are able to enter this market, as they are listed on stock exchangesbut there is a secondary market (Niche) "Sukuk bonds" are designed to get around religious laws banning the paymentof interest for money lending. But one of the most volatile debts in the DubaiWorld standstill is a $3.5bn Islamic bond due to be repaid in December. HSBC estimates there is $822bn Islamic finance debt outstanding in the world MANAGING FINANCIAL RISKS and crisis through the using OF SUKUKSTRUCTURES Long-Awaited Sukuk Cannot Rescue Egypt’s Economy Alone, Say Analysts Countries using Sukuk : Egypt, Malysia, Qatar, Turkey, Kazakhstan
    30. 30. Islamic Bond (cont’)The government is trying to sell some assets to getcash to build a new infra structure which will help toreinvested in new projects Road building or new telecom service or canal forjoining the Nile branches which will affect theunemployment rate lowering it and relocate andredistribute the employment rate all over Egypt.
    31. 31. Islamic Bond (cont’) Rachel Ziemba, the director of emerging markets atRoubini Global Economics, “Notes that the seeds for Egypt’s economic troubleswere planted by Mubarak. In addition to saddling thecountry with corruption and unemployment, Mubarak’sgovernment borrowed heavily to finance stimuluspackages during the worldwide economicdownturn, leaving Morsi to pick up the tab. “You had thatwhole period where people weren’t sharing the wealth.And then you had the global financial crisis, [with] thegovernment draining its resources trying to keep theshow on the road,” she says. “Morsi and his government didn’t really have avery strong hand to play.”
    32. 32. What Europe should do? European officials have said that they stand ready to helpEgypt’s economic transition with technicalassistance, soft loans, and aid. A range of Europeaninvestors and donors have already pledged a total of $6.5billion to Egypt, including $590 million for the period 2011-2013 alreadymade available from the European Union, an additional $1.3 billion from the EU in macro-financialassistance, concessional loans, and grants, potentiallending of up to $2.2 billion for 2012 and 2013 from theEuropean Investment Bank, and up to $1.3 billion a year forthe next two years from the European Bank forReconstruction and Development. But aside from about$900 million of this, most is conditional on the IMF loan
    33. 33. Can the Egyptian Economy besaved: Establishing a correct full statistical data analysis about the economicalsituation : base from Statistics Bureau, Director-General for PolicyPlanning (Statistical Standards) and Statistical Research and TrainingInstitute (To find real number shows how big is the problems) Relocate police and security all over the country to encourage theforeign investments which is the main motive for stock market New regulations flexable to organize the business life and the civil life(Internal, External) New approach in Human resources : the best professional expertiseinstead of the loyal Redistribution of the labor workforce in different sectors as it exceedthe real need in some sectors and deficit in other sectors that reallyneed labors Avoid crisis control and begain to make a long term plan through Riskcontrol and analysis
    34. 34. Future expectations and hopes:
    35. 35. Growing ties between Egypt, Turkey maysignal new regional orderBoth majority party in Turkey, Egypt is Muslim brother party
    36. 36. Egypt and Iran: Piouspolitics
    37. 37. BRÍCS+ EgyptEgyptian President Mohammed Mursi Attend the fifthBRICS summit in South Africa
    38. 38. Israel- USA relationship is going very formalafter a marriage of more than 35 years
    39. 39. References: http://www.indexmundi.com/egypt/economy_profile.html http://en.wikipedia.org/wiki/Egypt https://www.cia.gov/library/publications/the-world-factbook/geos/eg.html http://www.egyptindependent.com/news/egypt-inflation-set-climb-109-says-imf http://www.egyptindependent.com/subchannel/Economy%20news http://english.ahram.org.eg/NewsContent/3/12/69408/Business/Economy/IMF-cuts--growth-forecast-for-Egypt-economy-to-.aspx http://www.bbc.co.uk/news/world-middle-east-22403719 http://en.wikipedia.org/wiki/Egypt http://www.thedailybeast.com/articles/2013/05/02/egyptian-president-mohamed-morsi-s-biggest-challenge-the-economy-stupid.html http://www.brookings.edu/research/opinions/2013/05/01-egypt-economy-transition-ghanem http://www.guardian.co.uk/world/2013/may/16/egypt-worst-economic-crisis-1930s http://www.indexmundi.com/egypt/economy_profile.html
    40. 40. Questions

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