Great Decisions 2009

Egypt in the 21st Century

Egypt Economic Crisis

A slowdown in the domestic economy will exacerbate social discontent (which has been fuelled by high prices for staple goods during 2008), sparking sporadic outbursts of unrest over the next 10 year.

The government will continue to press ahead with its program of economic reform, aimed at raising living standards and creating employment.

Egypt Economic Crisis

A new fiscal stimulus package to boost economic growth is likely to lead to a severe deterioration of the public finances in fiscal year 2008/09.

Deficit possibly will reach 7.5% of GDP in 2008/09.

Expecting GDP growth of 5.1% in 2008/09 and 4.9% in 2009/10.

Egypt Economic Crisis

The trade deficit will narrow in 2009-10 compared with 2008, as falling commodity prices reduce the import bill.

The current-account surplus is therefore expected to widen over the outlook period.

Egypt Economic Crisis

Key indicators 2008 2009 2010 2011 2012 2013

Real GDP growth (%) 7.2 5.1 4.9 5.9 6.3 6.4

Consumer price inflation (av; %) 18.4 9.5 4.6 6.1 4.9 4.5

Budget balance (% of GDP) - 6.8 - 7.5 - 4.6 - 6.1 - 4.9 - 4.5

Current-account balance (% of GDP) 0.1 1.1 1.0 1.2 1.2 1.0

Commercial banks' lending rate (av; %)

13.0 12.8 12.7 12.0 12.0 12.5

Exchange rate E£:US$ (av) 5.43 5.59 5.62 5.67 5.65 5.65

Egypt Economic Crisis

Social tensions are likely to remain high in the near term, with sporadic demonstrations and other forms of social unrest.

High inflation during 2008 has undermined consumers' purchasing power and, with few democratic avenues to vent their anger, Egyptians are likely to take to the streets in increasing numbers.

Political Reality in Egypt

Presidential election, Sep 2005

Hosni Mubarak (National Democratic Party) 89.0 %

Ayman Nour (al-Ghad) 7.6 %

Noaman Gomaa (New Wafd) 2.9 %

Political Reality in Egypt

The president, Hosni Mubarak, will ensure that political control is relinquished only gradually, if at all.

The regime's firm grip on the levers of power, which leaves little space for democratic expression, is likely to further intensify public anger.

Political Reality in Egypt

Uncertainty continues to surround the outlook for the succession to the president.

President Mubarak is expected to attempt to engineer the succession of his second son, Gamal, through constitutional channels.

Political Reality in Egypt

A raft of 34 amendments to the constitution was passed in a referendum in late March 2007, making it virtually impossible for opposition parties, including the banned Muslim Brotherhood, to gain a political foothold.

Political Reality in Egypt

As yet no such person has developed the kind of public profile that might be expected of a likely contender.

However, it remains unclear how the military establishment that underpins the regime would view the prospect of a president without a military background (whether Gamal or someone else).

Political Reality in Egypt Although most Egyptians

appear resigned to the fact that Gamal will succeed his father, there is considerable resentment over what is seen as an attempt to introduce hereditary succession through the back door, and this could lead to large-scale demonstrations.