Egypt country overview

The economy of Egypt

Geography, People, Culture, and Economic Profile

Egypt information index

Industry of Egypt


During the 20th century, the manufacturing sector in Egypt experienced significant growth and became one of the largest contributors to the country’s economy. By the 21st century, it accounted for approximately one-fourth of the GDP, alongside the mining sector. However, domestic manufacturing faced challenges from the late 19th century until around 1930 due to free trade policies that favored the importation of foreign products.

In order to address these challenges and achieve economic diversification, the government implemented a customs tariff on foreign goods in 1930. This tariff aimed to promote the development of Egyptian manufacturing and increase national income. Additionally, the Bank of Egypt provided loans to Egyptian entrepreneurs in the 1920s and ’30s to stimulate domestic production in various industries such as printing, cotton ginning, transport, spinning and weaving, vegetable oil extraction, and pharmaceuticals and rayon manufacturing.

During World War II, Egypt served as a major Allied base and experienced limited access to European imports. This situation further fueled the growth of manufacturing, particularly in the textile sector.

Starting from the 1950s, the government began nationalizing most large-scale manufacturing establishments. Emphasis was then placed on the development of heavy industry after a long-term trade and aid agreement was established with the Soviet Union in 1964. Another aid agreement in 1970 led to the expansion of an iron and steel complex in Ḥulwān and the establishment of power-based industries, including an aluminum complex utilizing power generated by the High Dam. Additionally, an ammonium nitrate plant was opened in 1971, based on gases generated in the coking unit of the steel mill in Ḥulwān. Aswān also houses a nitrate fertilizer plant.

By the beginning of the 21st century, the majority of large manufacturing enterprises were still under state ownership or operation. However, the government had started selling significant holdings to the private sector. Major manufacturing sectors included chemicals (including pharmaceuticals), food products, textiles and garments, cement and other building materials, paper products, and derivatives of hydrocarbons (such as fuel oil, gasoline, lubricants, jet fuel, and asphalt). Iron, steel, and automobiles also played an increasingly important role in the Egyptian economy.


The origins of modern banking in Egypt can be traced back to the mid-19th century. The Bank of Egypt was established in 1858, followed by the Anglo-Egyptian Bank in 1864. Crédit Lyonnais, a French bank, began its operations in Egypt in 1866, followed by the Ottoman Bank in 1867, and several other French, Italian, and Greek banks. The National Bank of Egypt and the Agricultural Bank of Egypt were founded with British capital in 1898 and 1902 respectively. The first purely Egyptian bank, Banque Misr, was established in 1920.

From its inception, the National Bank of Egypt took on the role of a central bank, which was officially recognized by law in 1951. In 1957, all English and French banks and insurance companies were nationalized and taken over by Egyptian joint-stock companies. This meant that all shareholders, directors, and managers of these financial institutions had to be Egyptian citizens. Banque Misr, which not only conducted banking business but also controlled several industrial companies, was nationalized in 1960. In the same year, the National Bank of Egypt was divided into a commercial bank, retaining its original name, and the Central Bank of Egypt, which functioned as the central bank. Subsequently, all remaining financial institutions were nationalized in 1961, and their operations were consolidated into five commercial banks, along with the central bank, the government-sponsored Public Organization for Agricultural Credits and Co-operatives, the Development Industrial Bank, and three mortgage banks. The central bank is responsible for issuing the national currency, the Egyptian pound (Arabic: ginīh).

In the early 1970s, the government reorganized the banking system by merging some major banks and assigning specific functions to the rest. Two new banks were established, and foreign banks were once again allowed to operate in Egypt as part of an effort to liberalize the economy. Joint banking ventures between Egyptian and foreign banks became of particular interest. In 1980, Egypt saw the opening of its first international bank since the revolution, and a national investment bank was also established. Islamic banks, which provide dividends to investors instead of interest in accordance with Islamic law, were set up in Egypt. The stock exchanges in Cairo and Alexandria, which had been closed since the early 1960s, were reopened in 1992 and fully merged as the Cairo and Alexandria Stock Exchange in 1997.

The money supply in Egypt has generally followed the development of the economy. The authorities have aimed to maintain tolerable increases in the price level, although there were periods of significant price increases during the 1970s and ’80s. The Egyptian pound, which had long been pegged to the U.S. dollar, was allowed to float in January 2003.

Egypt is a member of the International Monetary Fund (IMF). Since World War II, the international liquidity of the Egyptian economy, including the Special Drawing Rights, has been low. In the late 1970s, both internal and external debts increased, mainly due to government subsidies to the private sector. In the 1980s and ’90s, the government gradually implemented price increases on goods and services, reducing but not eliminating subsidies for food and fuel. In 1991, Egypt signed an agreement with the IMF and the World Bank known as the Economic Reform and Structural Adjustment Program. This program aimed to reduce the fiscal deficit, remove consumer subsidies, eliminate price controls, liberalize trade, reform labor laws, and privatize state-owned enterprises. While the program strengthened Egypt’s economy in the 1990s, economic growth slowed in the early 21st century.


The value of imports in Egypt typically accounts for approximately one-third of the GDP, while exports make up about one-tenth. However, since World War II, exports have consistently fallen short of imports. The trade deficit was particularly significant between 1960 and 1965 due to increased development expenditure, reaching its peak in 1966. Following the 1973 war with Israel, there was a deliberate attempt to limit imports and boost exports, but these efforts yielded little success. In the early and mid-1980s, the trade deficit reached record highs primarily due to a decline in revenue from petroleum exports and an increase in food imports. These challenges have persisted into the early 21st century. Nonetheless, the substantial visible trade deficit has been partially offset by transfers from abroad, including aid from Western governments and remittances from Egyptians working overseas.

Approximately two-fifths of imports consist of raw materials, mineral and chemical products, and capital goods such as machinery, electrical apparatuses, and transport equipment. Foodstuffs make up around one-fifth of imports, while the remaining portion comprises other consumer goods. Egypt’s most significant exports include petroleum and petroleum products, followed by raw cotton, cotton yarn, and textiles. Additionally, raw materials, mineral and chemical products, and capital goods are also exported. Agricultural exports include rice, onions, garlic, and citrus fruit. China, the United States, Italy, Germany, and the Gulf Arab countries are among Egypt’s key trading partners.


The service sector, which includes retail sales, tourism, and government services, is a significant contributor to the economy. The government is one of the largest employers in the country and its contracts play a crucial role in supporting other sectors of Egypt’s heavily socialized economy. Despite privatization efforts and fiscal austerity measures in the late 20th century, construction projects, especially major public-works projects, have been a significant source of employment and national expenditure. Tourism has traditionally been a vital source of foreign exchange, attracting millions of visitors to Egypt each year, primarily from Europe, Asia, and other Arab countries. The country’s warm winters, beaches, and gambling casinos are as appealing to tourists as its ancient monuments. While the number of tourists and their spending in Egypt increased during the 1990s and the early 2000s, security issues have occasionally impacted the industry. The 1997 massacre at the temple of Hatshepsut in Luxor resulted in a temporary decline in visitor numbers. The uprising that led to the overthrow of President Hosni Mubarak in 2011 caused a more significant and prolonged drop in tourism, but the industry has been recovering rapidly since 2018.

Labour and taxation

Approximately 25% of the population relies on agriculture as their source of income, while manufacturing and mining employ over 10% of the labor force. The remaining working population is engaged in service, trade, finance, and transportation sectors. Due to limited land availability, labor underemployment became evident in agriculture in the early 20th century. However, the growth of non-agricultural jobs has not kept up with the rapidly expanding labor force, leading to unemployment in the 1990s when the government eliminated unproductive positions as part of a fiscal austerity policy. The rural population, particularly landless agricultural laborers, has the lowest standard of living in the country. Professional groups also receive low salaries, while industrial and urban workers generally enjoy a higher standard of living. The highest wages are found in industries such as petroleum and manufacturing, where workers receive additional benefits such as social insurance and improved health and housing facilities. In the past, low wages were somewhat offset by the low cost of living, but persistent high inflation rates since the late 1970s have neutralized this advantage.

Since 1976, trade unions have been tightly controlled by the government through the Egyptian Trade Union Federation (ETUF) and other organizations closely linked to the government. After President Mubarak’s removal, numerous independent trade unions emerged, but the formalization of these unions through board elections was consistently delayed. When elections finally took place in 2018, the process was heavily restricted by the state, and the ETUF remained dominant. While trade unions actively participate in national policy-making, they rarely negotiate for higher wages or improved working conditions. Labor legislation in the early 21st century has legalized some strikes, provided that the union gives advance notice. However, unauthorized strikes have also occurred. Child labor is subject to well-defined rules, allowing children as young as 12 to work in seasonal agriculture and those aged 14 and older to engage in part-time industrial work. However, enforcing these rules has proven challenging for authorities. In farm families, for example, everyone, including children, contributes to work, and even Egyptians who have left rural life may still view children as economic assets. Although gender-based discrimination is illegal, social customs have limited women’s access to various occupations. The workweek in Egypt typically runs from Sunday through Thursday. Since the 1960s, several new employers’ associations have emerged, and the Federation of Egyptian Industries (FEI; 1922) has regained powers it previously lost, such as the authority to reject government-proposed trade boycotts.

Given that the majority of the population earns very low incomes, direct taxation primarily affects the wealthy. Income tax rates are highly progressive in an attempt to achieve income distribution equality. However, the income gap between rich and poor Egyptians has noticeably widened since the 1960s. Direct taxes on income, mostly imposed on businesses, contribute approximately one-fourth of government revenue, while sales taxes generate over one-third of revenue.

Transportation and telecommunications

The majority of Egypt’s communications system is under state control. While it provides sufficient coverage, there can be issues due to excessive usage. The transportation flow in the country is largely influenced by its topographical layout. The routes follow the north-south direction of the Nile, run along the narrow coastal plain of the Mediterranean Sea, and become more complex in the delta region.

Approximately 80% of Egypt’s road network is paved. Rural roads, typically made of dried mud, align with the irrigation canals. Many desert roads are nothing more than tracks. The Cairo-Alexandria highway passes through Banhā, Ṭanṭā, and Damanhūr. The alternate desert road from Alexandria to Cairo has undergone significant improvements, and a well-maintained road connects Alexandria to Libya via Marsā Maṭrūḥ on the Mediterranean coast. Paved roads also link Cairo to Al-Fayyūm, and there are good roads connecting various towns in the delta and along the Suez Canal. A paved road runs parallel to the Nile from Cairo to Aswān, and another paved road connects Asyūṭ to Al-Khārijah and Al-Dākhilah in the Western Desert. The coastal route to Marsā al-ʿAlam on the Red Sea is poorly paved, as are the connecting sections inland.

Railways connect Cairo to Alexandria, as well as to the delta and canal towns. They also extend southward to Aswān and the High Dam. Branchlines connect Cairo to Al-Fayyūm and Alexandria to Marsā Maṭrūḥ. A network of light railway lines connects the Fayyūm area and the delta villages to the main lines. Diesel-driven trains operate on the main lines, while electric lines connect Cairo to the suburbs of Ḥulwān and Heliopolis. The Cairo Metro consists of three commuter rail lines, with plans for further extension of the third line.

The Suez Canal, which was closed during the Six-Day War with Israel in 1967, was reopened in 1975 and later expanded to accommodate larger ships. It serves as a major connection between the Mediterranean and Red Seas. The Nile and its navigable canals are important for transportation, especially for heavy goods. There are approximately 2,000 miles (3,200 km) of navigable waterways in Egypt, with about half of this on the Nile, which is navigable throughout its entire length. The inland-waterway freight fleet consists of tugs, motorized barges, towed barges, and flat-bottomed feluccas (two- or three-masted lateen-rigged sailing ships).

Egypt has nine ports along its long coastline, with the busiest being Alexandria, Port Said, and Suez. Alexandria, with its natural harbor, handles most of the country’s imports, exports, and passenger traffic. Port Said, located at the northern entrance of the Suez Canal, has less berthing and loading facilities compared to Alexandria. Suez primarily serves as an entry port for petroleum, minerals from the Egyptian Red Sea coast, and goods from Asia.

Cairo is a significant communication hub for international air routes and is served by three international airports. Cairo International Airport, located in Heliopolis, has three operational terminals year-round and an additional seasonal terminal, catering to major international airlines. The Sphinx International Airport, opened in 2019 near the Great Sphinx and the Pyramids of Giza, serves as a tourist destination. The Capital International Airport, opened in the same year, is located to the east and is intended to serve Egypt’s new capital city, set to be established in 2020. Other international airports can be found throughout Egypt, including in Alexandria and Sharm el-Sheikh. EgyptAir, the national airline, operates flights to the Middle East, Europe, North America, Africa, and the Far East, as well as domestic services.

Egypt was among the first countries in the Middle East to establish a telegraph system in the mid-19th century, followed shortly by a telephone system. Since then, Egypt has been a regional leader in the field of telecommunications. The telecommunications infrastructure is more developed in urban areas, particularly in Lower Egypt, and the government has invested significant resources in its improvement. Telephone density is relatively high, with approximately one phone line for every 10 people. Cellular phones were introduced in the mid-1990s and have surpassed landlines in usage within a decade. State-owned Telecom Egypt has formed joint ventures with foreign-owned companies to provide cellular telephone services in the country.

Television and radio are widely available in Egypt. In 1998, the government-owned Egyptian Radio and Television Union launched Nilesat, Egypt’s first communication satellite, which provides access to private television broadcasters. Satellite dishes, which receive both Egyptian and foreign broadcasts, are popular among middle-class and affluent households. Over two-fifths of the population has access to the Internet, with internet cafes being popular access points. Many Egyptians also connect to the internet wirelessly through mobile phones and USB adapters.

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