A tight monetary policy has not prevented the government from launching an initiative of LE150 billion to finance industrial and agricultural sectors at an interest rate of 11 per cent.
But why industry and agriculture? To answer this question, we should examine the targets.
The objective is to support the nation’s labour-intensive production sectors. The government aims to keep unemployment rates below 7.5 per cent of the labour force despite the economic slowdown.
Agriculture and industry account for about 15 and 11.7 per cent of the gross domestic product (GDP), according to data from the state-run Central Agency for Public Agency for Mobilisation and Statistics (CAPMAS). The two strategic sectors account for 27 per cent of the country’s GDP and 47.5 per cent of its workforce, according to CAPMAS figures.
The government is targeting GDP growth above five per cent in the 2022/23 fiscal year ending June 30. Economic growth aims to increase investment, expand output and optimise the use of available economic resources.
It also focuses on improving production processes and increasing individual incomes. Good infrastructure is required for growth in any country. In other words, it needs an institutional financial, legal and social framework commensurate with the aspirations for high economic growth.
Over the past eight years, the government has worked hard to improve infrastructure projects to drive growth. However, as global economic challenges affect the global macroeconomic landscape, it is crucial to boost aggregate demand through public investment to sustain growth.
A gradual rebound in aggregate demand is expected to improve Egypt’s economic prospects in 2023. Economic growth is the result of rising demand for goods and services, which drives the pace of production and manufacturing. Exports and tourism will play a vital role to support GDP growth.
Higher overall domestic demand and increased tourism, which accounts for 13 per cent of local employment according to Ministry of Tourism data, will likely drive the recovery.
Furthermore, government accession to reforms will have the final say in any sustained medium-term GDP growth.
