Egypt has faced increasing geopolitical turmoil, with conflicts in neighboring Gaza and Lebanon severely affecting its economy. That’s according to the country's planning ministry which recently announced its annual GDP growth rate has dropped to 2.4%, down from 3.8% a year ago, Reuters reports.
“Amid ongoing geopolitical tensions and global economic uncertainty, key sectors of the Egyptian economy have been impacted, leading to a decline in economic activity,” said the ministry in a statement.
A significant factor in this downturn is the disruption in shipping in the Red Sea, which has sharply reduced Suez Canal revenue. On Tuesday, Egypt’s Central Bank reported a fall in the Canal’s revenue to $6.6 billion for 2023/24, compared to $8.8 billion the previous year. Houthi rebels from Yemen, backed by Iran, have targeted ships in the Red Sea with missiles and drones, aiming to disrupt global trade in solidarity with Palestinians in Gaza.
Additionally, the ministry highlighted that the government's decision to cut subsidies has also contributed to slower growth. These cuts are part of the conditions tied to an $8 billion loan from the International Monetary Fund, under which Egypt agreed to reduce state involvement in the economy and encourage a more prominent role for the private sector.
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