Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Top Economic Indicators
Egypt is an important strategic partner of the United States and continues to engage with Egypt to advance mutually shared interests, including strong commercial ties. With a population of over 101 million and a GDP of $362 billion, there are solid opportunities for U.S. firms in the medium-to-long term. Egypt’s strategic location offers companies a platform for their commercial activities into the Middle East and Africa.
Egypt is the United States’ 41st largest goods export market in the world, the top export market for U.S. goods and services in Africa, and the fourth largest in the Middle East. While economic slowdown as a result of the COVID-19 pandemic resulted in a 20 percent drop in U.S.-Egyptian trade in 2020 from 2019, overall trade still valued $6.8 billion in 2020. This represents a growth of by nearly 38 percent from 2016 to 2020. U.S. exports to Egypt were $4.7 billion in 2020, up 34 percent since 2016. Meanwhile, Egyptian exports to the U.S. were $2.2 billion last year, approximately a 50 percent increase in value from 2016.
U.S. exports to Egypt include agricultural goods, transportation equipment, chemicals, machinery, and computer & electronic products. U.S. imports from Egypt include apparel, petroleum, processed foods, textiles, and chemicals. Under the U.S.-Egypt Qualifying Industrial Zone (QIZ) agreement, the United States waives duties on imports from Egypt if the value includes 10.5% Israeli content; this program promotes stronger ties between the region’s peace partners.
Textile and apparel exports are the largest Egyptian non-fuel exports to the United States, with apparel exports accounting for 36% of all Egyptian exports to the U.S. in 2020. Total textile and apparel exports to the United States in 2019 were $1.13 billion. QIZ exports to the United States were $1.1 billion in 2020. The textiles and apparel industry is the second-largest industrial employer in Egypt, employing 15 percent of Egypt’s manufacturing workforce and nearly half of women working in manufacturing. Together, textiles and apparel account for around 3% of Egypt’s GDP.
Egypt’s economy is diverse, with agriculture, manufacturing, energy and services constituting the bulk of output. Agriculture accounts for 40 percent of employment and 14 percent of GDP. Egypt relies heavily on imported wheat, corn and soybeans, much of which is sourced from the U.S.
Egypt, like the rest of the world, has been impacted by the COVID-19 pandemic. However, thanks to quick mitigating actions taken by the Government of Egypt and ongoing International Monetary Fund (IMF)-sanctioned reforms, the economy grew by 3.5% in 2020, the only economy in the Middle East and North Africa (MENA) to record positive growth. Though economic activity is poised to continue to be disrupted by COVID-19, Egypt’s GDP is still projected to grow by 2.5% in 2021. The tourism sector in particular has been greatly impacted by the ongoing COVID-19 pandemic. Though tourism almost came to a standstill at the beginning of the outbreak, it is now coming back online, with more international flights resuming and tourists from many countries able to visit by producing a negative Covid-19 PCR test upon arrival.
Egypt and the United States signed a Bilateral Investment Treaty in 1982 to promote and facilitate investment between our countries. Egypt and the United States entered into a Trade and Investment Framework Agreement in 1999. The agreement establishes a framework for expanding trade while resolving outstanding disputes between both countries. It is a natural step towards negotiating a free trade agreement. American firms are active in most sectors of the Egyptian economy, including oil and gas exploration and production, healthcare, transportation, financial services, manufacturing, construction, telecommunications and information technology, and the restaurant and hospitality industry.
The U.S. is the third largest foreign investor in Egypt, with $1.37 billion invested in 2019. The UK and Belgium have been the two largest investors over the past decade, with $6.8 and $2.2 billion invested in 2019. The total stock of U.S. FDI is nearly $24 billion, with $20 billion concentrated in the oil and gas sector. (Overall, nearly 75 percent of Egypt’s FDI goes to the oil and gas sector). For the fourth year in a row, Egypt was the top FDI destination in Africa, and was the second largest FDI destination in the Middle East.
The Government of Egypt (GOE) understands that attracting FDI is key to addressing many of the economic challenges it faces, including low economic growth, high unemployment, current account imbalances, and hard currency shortages.
The government also hopes to attract international investment in several “mega projects,” including a large-scale industrial and logistics zone around the Suez Canal, the construction of a new national administrative capital, a 1.5 million-hectare agricultural land reclamation and development project, and building several petrochemical plants and refurbishing refineries, upgrading the country’s ports, airports, and transportation network, and exploiting mineral resources in the Golden Triangle economic zone between the Red Sea and the Nile River.