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Egypt's living standards will come under more pressure

Thursday, December 15, 2022

Significance

The target is highly optimistic. A recent upturn in headline growth reflects improved terms of trade and better performance in export-oriented sectors, notably tourism and hydrocarbons. Living standards for most Egyptians are facing severe pressure because of the surge in annual inflation, which now stands above 18%.

Impacts

  • The government will try to present the relatively high headline rate of GDP growth as a sign of the underlying strength of the economy.
  • Some sectors, notably tourism, telecoms, natural gas and the Suez Canal, are performing well, but overall domestic demand is weak.
  • The erosion of living standards will breed resentment, but any protests will be heavily repressed.

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