New York - Cairo: Europe and the Arabs
The United Nations Development Program issued a study in which it said that Egypt is witnessing repercussions in various fields and social and economic pressures as a result of the ongoing war in Gaza, which may lead to a decline in human development for five years. He pointed out that Egypt's revenues from tourism and the Suez Canal were affected. According to what was stated in the United Nations daily news bulletin, a copy of which we received on Thursday morning
The program indicated that the Egyptian economy relies heavily on tourism, remittances, Suez Canal revenues, external debt, and capital flows. He said in his evaluation study that the repercussions of the war are putting pressure on the path of economic reform and development in Egypt.
The new analysis examines the potential social and economic impact of the war in Gaza on the Egyptian economy and society and provides insights for policymakers and stakeholders to mitigate risks.
The assessment estimates impacts through projections of six months (low severity), nine months (medium severity), and one year (high severity).
The study's authors estimate that Egypt's GDP will decline by rates ranging between 2.6% and 3.0% according to the expected scenario, with the unemployment rate rising from 7.8% to 8.7% in the moderate severity scenario and 9.1% in the high severity scenario.
“The war is testing Egypt’s ability to withstand and deal with these turbulent times, especially the challenges associated with external shocks,” said Alessandro Fracasetti, UNDP Resident Representative in Egypt.
He stressed the urgent need to address the social and economic impact of the war, adding, “This study underscores the urgency of coordinated efforts to mitigate the negative effects on the Egyptian economy and ensure sustainable recovery.”
Main sources of revenue
The study highlights the profound economic challenges facing Egypt, as the country's main sources of revenue from tourism and the Suez Canal were severely damaged as a result of the attacks in the Red Sea region, and the subsequent repercussions on maritime transport, which exacerbated the economic hardship and necessitated rapid recovery measures.
The United Nations Development Program estimates that tourism and Suez Canal revenues in the current and next fiscal years will decline at about $9.9 billion (medium severity scenario), and $13.7 billion if the war intensifies with the participation of other regional countries and actors (high severity scenario).
In addition, projections indicate a possible decline in Egypt's Human Development Index, which could reach the level recorded in 2018, representing a loss of up to five years in development gains.
The study highlights the urgent need for targeted measures and political reforms to ensure social and economic stability in Egypt. The program indicated that the Egyptian government has already signed several new agreements that have led to an increase in the flow of foreign currencies and capital.
The study proposes policy recommendations that include strengthening mechanisms to support the most needy population groups, implementing labor market reforms and enhancing regional economic cooperation.