Sherif Kamel Talks Egypt's Top 3 Economic Challenges for 2023
With three currency devaluations in the last year and rising inflation, Egypt’s economic outlook for 2023 is riddled with uncertainty. News@AUC reached out to Sherif Kamel, dean of AUC’s School of Business, to identify the top three obstacles facing the economy at this time.
Here’s what he had to say:
- Global Recession, Rising Inflation
In 2023, Egypt’s economy will be challenging, given the expected repercussions of the global recession and the rising inflation, which has already crept in over the last several weeks. This will add more pressure on the government to take some structural reform actions and provide a more conducive environment for business and investments. Businesses will need to adapt to navigate these difficult times, while individuals must adjust and prioritize to absorb the impact on their lives and livelihoods.
- Currency Uncertainty
Today, the U.S. dollar is valued at 30.68 Egyptian pounds compared to 15.71 on the same day last year, losing 50 percent of its value in one year. This value is one of many indicators of the economy, but the question is––is the pound still overvalued? Does the current value reflect a complete float? Or is there more to come? It is worth noting that the Central Bank’s objective is not devaluation itself but rather reaching the actual value of the Egyptian pound, which would have multiple implications on several other economic elements.
- Towards Transformation
The overall economic indicators have put more pressure on society. Therefore, in 2023 and beyond, the government is expected to make some timely decisions, including:
- Transforming its role in the economy into an enabler, regulator and supporter of the private sector, helping it to grow and become more competitive.
- Expediting structural reform and optimizing efficiency levels across the board through multiple approaches, including but not limited to digital transformation.
- Making the country more inviting as a business destination for international investors, which can yield foreign direct investments across different economic sectors — not only in oil and gas.
- Rationalizing public spending and focusing on sectors such as education and health.
- Transforming export revenues by investing in critical sectors and industries where Egypt has a competitive edge, such as tourism.
- Leveraging cross-border trade in addition to working on reducing national debt.
The list is long, but it is doable, and it could be a game-changer for a large and growing society with limited purchasing power yet enormous potential that is mostly untapped. The government is already discussing these issues. It is time to take action supported by economic policies and an empowered private sector that will act as a catalyst for foreign direct investments and create a wide range of economic opportunities for different segments of society.