CAIRO: “A dynamic and growing Egypt constitutes an integral part of a more secure and stable Middle East,” Mohamed el-Erian, the chief economic adviser at Allianz SE, wrote in a Bloomberg editorial Tuesday, referring to an “economic transformation” Egypt hopes to see after the country’s Economic Development Conference that will start Friday.
Egypt’s economy grew by 5.6 percent in the first half of 2014/15 FY, roughly five-fold the 1.4 percent growth achieved in the same period a year earlier, with the second quarter seeing 4.3 percent growth, Minister of Planning Ashraf al-Araby announced March 7.
Acknowledging significant improvement in Egypt’s economic performance, Erian still noted the country’s potential substantially outweighing current economic figures. Unlocking this “untapped potential” has been impeded for decades by political factors and bureaucratic red-tape, according to Erian.
Thus, in Erian’s own words, Egypt still must go through four transitional phases if it aspires to a prosperous economy:
- “Improving policy implementation to ensure that the design of programs includes responsive execution that adjusts in a timely fashion to developments in an increasingly volatile global economy.
- Moving economic development away from relying just on state-led growth to a more inclusive model that supplements important national projects with public-private partnerships and private sector activities (particularly small and medium-sized businesses and start-ups).
- Restructuring domestic institutions to ensure they are more transparent, efficient, accountable and inclusive, and that they meet the needs of all Egypt’s people, not a privileged few.
- Broadening external support for Egypt’s domestic reforms from a few partners to a wider range of donors (including regional and multilateral institutions).”
Egypt’s real gross domestic product (GDP) hiked significantly to 6.8 percent in the first quarter of 2014/15 FY, the highest annual growth rate since the fourth quarter in 2007/08, according to Central Bank data.
Applauding the government’s recent steps towards economic reform, as well as support from Arab donors, Erian said Egypt has pursued the following measures to reach economic reform:
- “Enhancing actual and potential growth and job creation, including a new investment law to reduce inefficiencies, increase investor protection and provide targeted incentives; and a subsidy reform to better target support for the more vulnerable segments of society.
- Encouraging sector-focused programs by emphasizing critical economic and social areas such as education, health, housing, energy, infrastructure and information and communications technology.
- Creating a macroeconomic framework that credibly targets sustained high inclusive growth, whose benefits are shared widely by the population, with particular emphasis on protecting the most vulnerable.”