A while ago I wrote a piece about Middle Eastern economies that sashayed through the main economic hotspots in the Arab league and flushed out any economic jargon I met on the way with a few explanations.
With a stark image crossing my mind, I described the Middle East as an economic beast surging with strength, with a few weak limbs that make for its smaller and less-exciting economies. And then I made a few predictions.
Uh-oh.
I suggested that the rolling geopolitical unrest in the region would stain the most prominent Arab world economies, including the economic powerhouse Egypt.
It went a little something like this:
“Despite having the second largest economy, Egypt is still placed at low-income due to poverty and high unemployment rates. Estimates in 2005 suggested that 20 percent of the country’s population was below the poverty line, although this is believed to have significantly increased since … the politically crisis-swept Egypt could experience slower growth at 1.9 percent in 2011.”
While this rings true, I failed to look beyond the current geopolitical mess. I focused greatly on oil-rich economies of the Gulf-Arab states and their prospects, but neglected to touch on Egypt’s potential, which is actually a no-brainer and can be rationally predicted.
Egypt’s economy is currently worth $500 billion. But according to a recent report from HSBC bank, by the year 2050 the North African economy will reach $1.165 trillion and will surpass Saudi Arabia as the region’s largest.
And it partly comes down to the simplest of explanations: population. Although Saudi Arabia is currently the biggest economy of the region, with an annual GDP of $622 billion, it has a population of only 25 million, while Egypt’s population is 85 million and growing.
The “rise of Egypt” will come down to rapid demographics shifts, major improvements in emerging market infrastructure, education and spending patterns, the report says.
It will emerge as the 19th largest economy in the world, which is pretty good considering its poverty figures and the fact that it its public debt stood at 80.5 percent of its gross domestic product.
But there are several encouraging facts about Egypt’s economic prosperity that are not widely publicized. Thinking back to pre-revolution Egypt, something that many of us have not talked about in a while as we home in on the country’s “newness” (gleefully imagining Egypt through before and after pictures, one with Mr. Mubarak and the other without), there were optimistic economic indicators.
Between 1998 and 2006, the country slashed its unemployment rate, from 11.7 percent to 8.3 percent. And Mr. Mubarak was in charge.
And on the subject of unemployment, a bold reform in 2003 allowed the private sector to expand as a labor law allowed firms to hire directly, while the majority of the job creation remained informal but progressive in nature. And Mr. Mubarak was there.
Post-revolution Egypt must meet new economic challenges and make new reforms, and it’s an exciting time, for the country is expected to progress at a much faster pace. Egypt can utilize its people power and overcome the major losses sustained during the recent months of civil unrest. Egypt’s economic revival should not be overlooked. The country is a beast in itself.
(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: eman.elshenawi@mbc.net.)
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