Current economic conditions, here and elsewhere, might be baffling.
The military and geostrategic conflicts that erupted earlier this year keep raging on and show no signs of subsiding any time soon.
There are, however, good reasons to assume that the Egyptian economy will get out of the current crisis in better shape.
The economic ailments suffered internally have their roots outside national borders.
This means that they do not boil down to structural problems in the makeup of the national economy.
Egypt did a wonderful job before the war in Ukraine, having succeeded in significantly bringing important indicators, namely inflation and unemployment, down.
The Egyptian pound held its own ground against foreign currencies for a long time since 2016.
Reports by international financial institutions and credit rating agencies brimmed with praise for Egypt’s economic performance.
Nonetheless, the war in Ukraine caused commodity prices in the international market to surge across the board.
This meant that Egypt needed to pay more for importing the same amount of commodities.
This is the real problem, especially with foreign currency revenues remaining the same or even going down because of the war.
Major foreign currency earners, especially the tourism sector, also lost revenues to the war.
Foreign currency reserves at the Central Bank started dipping at the rate of $2 billion each month in the first few months of the war.
Nevertheless, measures taken by the government to reduce imports slowed down the drop in the reserves, even as they had their own downsides.
Now, revenues from the Suez Canal, remittances from Egyptians in other countries, the exports and revenues from tourism are all picking up.
Together with foreign investment deals that are in the pipeline now, these growing revenues offer good reason for optimism.
Egypt will overcome the current crisis and emerge even stronger. Just remember this.
Discussion about this post