WHAT CAUSED EGYPT’S ECONOMIC WOES?
Economy
How deep are Egypt’s economic troubles?
An over-valued currency, weak property rights and institutions, and an overbearing state and military have deterred investment and competition. Subsidies – though now reduced – have long drained the budget.
President Abdel Fattah al-Sisi often blames turmoil following a 2011 uprising and rapid population growth — the World Bank put annual population growth at 1.7% in 2021 — for the country’s economic struggles. Since 2020, authorities have pointed to external shocks including the COVID-19 pandemic and the war in Ukraine.
But analysts also cite policy missteps including costly defense of the Egyptian pound, a dependence on fickle foreign portfolio investments, and a failure to carry out structural reforms.
HOW BAD HAVE THINGS BECOME?
The economy has been growing steadily, but the impact of that growth – forecast at 4% to 5% this year – is blunted by the population surge. Many Egyptians say their standard of living has been eroded.
Annual headline inflation surged to 25.8% in January, the highest level for five years, according to official data. Prices for many staple foods have risen much faster.
Official data classified about 30% of the population as poor before COVID-19 struck, and analysts say numbers have risen since then. As many as 60% of Egypt’s 104 million citizens are estimated to be below, or close to the poverty line.
Unemployment has fallen to just over 7%, but labor market participation also dropped steadily in the decade to 2020. Parts of the public education system are in a state of collapse. Many graduates with the opportunity to do so seek work abroad.
Both Western and Gulf states have broadly viewed Egypt under Sisi as a lynchpin of security in a volatile region.
As the fallout from the Ukraine war delivered Egypt its latest economic shock, Cairo received billions in deposits and investments from Gulf allies including Saudi Arabia and the United Arab Emirates.
But although Gulf states have also rolled over existing deposits they have toughened conditions for injecting new money, increasingly seeking investments that provide a return.
In March 2022, the government said it had begun talks for its latest financial package from the IMF, eventually confirming a $3 billion loan linked to reforms that include reducing the footprint of the state and the military in the economy.
Egypt’s debt burden has been climbing, though analysts differ over how much of a risk this presents.
The government forecasts that by the end of the financial year in June debt will stand at 93% of GDP, a measure that has risen over the past few years and which it wants to reduce to 75% by 2026.
A heavy debt burden, rising interest rates and a weakening currency have raised the cost of servicing debt. Interest payments on debt are forecast to swallow more than 45% of all revenue in the financial year that ends in June.
Substantial principle and interest payments on foreign debt contribute to a large external financing gap – the difference between supply of and demand for foreign currency financing. Egypt must repay the IMF alone $11.4 billion over the next three years.
Beyond outlays on regular costs, including public salaries and services, Egypt has spent heavily on infrastructure under Sisi.
This includes housing, a number of new cities, and rapid road building. The most prominent mega-project is a new capital in the desert east of Cairo, which one official said the state was trying to pay the $58 billion cost of through land sales and investments.
Egypt’s arms imports also surged over the past decade, making it the third-largest importer globally, according to the Stockholm International Peace Research Institute.
Officials say they have upped spending on social programs for the poor, including a cash handout scheme that covers five million families, though critics say the welfare is insufficient to protect living standards. (Writing by Aidan Lewis; Editing by Sharon Singleton)
Economy
Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
The Canadian Press. All rights reserved.
Economy
Trump’s victory sparks concerns over ripple effect on Canadian economy
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
The Canadian Press. All rights reserved.
Economy
September merchandise trade deficit narrows to $1.3 billion: Statistics Canada
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
The Canadian Press. All rights reserved.
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