The Egyptian economy to recover slowly, leaving the national unemployment rate to decline over the next five years, according to Bryan Plamondon, Senior Economist, IHS Economics.
IHS forecasts an average unemployment of 13.6% this year and 12.2% in 2015, dropping to 10.6% in 2019. We will probably revise down slightly our 2014 projection for unemployment to 13.4% for the September forecast round given the second-quarter developments. Meanwhile, the overarching performance of the economy, and hence the likelihood of more solid employment growth, will remain contingent upon a stable political environment.
Egypt’s national unemployment rate edged marginally lower to 13.3% during the second quarter, from 13.4% during the first quarter, according to the latest figures from the country’s Central Agency for Public Mobilisation and Statistics. However, Egypt’s total unemployed fell on a quarter-on-quarter basis for the first time since the third quarter of 2012.
The Egyptian labour market remains weak, as economic activity, particularly in critical employment sectors such as tourism, remains depressed amid the ongoing tensions and security concerns. However, the second-quarter labour-force statistics were better than expected.
The second round of fiscal stimulus, largely funded by Gulf aid at the beginning of the year) seems to have had a positive impact on employment, alongside greater stability on the political front following the presidential election in May. Egypt’s ability to fuel stronger job creation – particularly as more people return to the labour market – will be crucial to reduce unemployment further, but only limited near-term improvement is expected.