Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
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 100 million and a GDP of $303 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’ 45th 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. U.S.-Egyptian trade grew by nearly 76 percent from 2016 to 2019, from just under $5 billion to almost $8.8 billion last year. U.S. exports to Egypt were $5.5 billion in 2019, up 57 percent since 2016.
Egyptian exports to the U.S. were $3.3 billion last year, more than double their value in 2016. Exports to the U.S. under the GSP program doubled between 2018 and 2019, from $97 million to $205 million.
U.S. exports to Egypt include wheat and corn, mineral fuel and oil, machinery, aircraft, and iron and steel products. U.S. imports from Egypt include apparel, natural gas and oil, fertilizers, textiles, and agricultural products. 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 account for half of Egyptian non-fuel exports to the United States, with apparel exports accounting for 86 percent of those exports in 2019. 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 2019.
Egypt, like the rest of the world, has been impacted by the COVID-19 pandemic. According to USAID Egypt, the pandemic has negatively impacted most sectors of the economy and with it both employment and investment. That said, thanks to quick mitigating actions taken by the Government of Egypt and ongoing International Monetary Fund (IMF)-sanctioned reforms, the economy is forecast to expand in 2020. The Fund now projects GDP will grow by 2% in 2020 (compared to earlier forecast of 5.8%) before accelerating to 2.8% in 2021. Tourism and textile have been impacted the most. Tourism almost came to a standstill at the beginning of the outbreak and is now slowly coming back online. Textile and apparel exports fell by 44 percent between January and April 2020, and QIZ exports fell by 53 percent in the same period. Textile and apparel exports to the E.U., which together with the United States account for the overwhelming majority of textile and apparel exports, fell by a similar amount in the first four months of 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 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.
Thanks to its successful implementation of its IMF-backed three-year, $12 billion economic reform package, Egypt finds itself in a better position than its neighbors to withstand the impacts of the COVID-19 outbreak.
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.