Egypt's economic outlook faces uncertainties due to the Gaza conflict

Posted on November 24, 2023   |  

Egypt's economy, already facing challenges, encounters heightened risks from the Gaza Strip conflict, impacting both tourism and natural gas imports.

Analysts suggest that Gulf countries, formerly investors, might renew financial support amidst the ongoing Gaza conflict.

The Gaza war worsens economic challenges exposed by Russia's invasion of Ukraine and the enduring impact of the COVID-19 pandemic, underscoring longstanding weaknesses in Egypt's economy.

Egypt, heavily dependent on short-term investments, tourism, and remittances, remains vulnerable to external shocks.

Pressures mount with a significant foreign debt exceeding $28 billion due in 2024, coupled with a foreign currency shortage and delays in IMF programs.

Despite recent tourism growth, the Gaza crisis poses a threat to this sector, earlier expected to expand by 30-40% in 2023.

Sinai destinations like Taba, Nuweiba, Dahab, and Sharm el-Sheikh bear the brunt of the war, with a 10-12% net cancellation rate since October, though overall hotel occupancy experienced an 8% uptick in October 2023.

Disruption in natural gas imports from Israel intensifies economic strain in Egypt, with gas supplies dropping to zero amid the conflict, impacting industries and overall supply.