Today, Friday, marks the one-year anniversary of the start of the Russian-Ukrainian war, which had a clear impact on the economies of emerging countries, as they faced the challenges of global inflation and the high price of the dollar. The Egyptian economy is an example of the impact of the Ukraine war, after the war erased its gains in the last six years.
The war in Ukraine erased 6 years of the gains of the Egyptian economy, since the start of implementing the economic reform program in cooperation with the International Monetary Fund in 2016.
Egypt’s foreign exchange reserves fell to their lowest level in August at $33.14 billion from $41 billion in February.
The pound was devalued 3 times and interest rates were raised by 800 basis points. The core inflation rate recorded at the end of last January 31.2% on an annual basis. Foreign investments in debt instruments amounted to $22 billion.
These effects, albeit with less intensity, were repeated among a number of emerging countries, amid the continuing effects of the war on the global economy in general. However, these effects may have been exacerbated in Egypt as a result of its economic relationship with Russia and Ukraine.
Ayman Yassin, CEO of the Business Community Group, says that the impact in Egypt was direct due to tourism, wheat and grain prices, and the withdrawal of foreign investment.
To get out of the crisis, Egypt resorted to the International Monetary Fund in a new agreement whereby it would obtain a loan of $3 billion.
Ahmed Samir, a member of the Egyptian Senate, said that the years 2023 and 2024 will be the worst for the Egyptian economy, and that recovery will begin in 2025.
It is not expected that the suffering of the Egyptian economy will end soon, especially with the continuation of the Russian-Ukrainian war and its repercussions on the global economy, which coincides with a tightening monetary policy that has raised global interest rates to record levels, making it difficult for emerging countries to obtain or service financing.