Estimating the impacts of expected reductions in tourism, Suez Canal revenues, and remittances

By Clemens Breisinger, Abla Abdelatif, Mariam Raouf, and Manfred Wiebelt

REGIONAL PROGRAM POLICY NOTE

March 2020

Egypt’s recent economic success will almost certainly be interrupted by the COVID-19
pandemic. We examine the likely impact on the Egyptian economy of a significant reduction
in tourism, payments received from the Suez Canal, and remittances from Egyptians working
abroad because of the slowdown in the global economy due to the COVID-19 virus.

• Our results suggest that COVID-19 could reduce national GDP by between 0.7 and 0.8
percent (EGP 36 to 41 billion) for each month that the global crisis continues.
• Similarly, household consumption and expenditure is estimated to decline on average
by between EGP 153 and EGP 180 per person per month, which is between 9.0 and
10.6 percent of average household income.
• The cumulative loss in GDP from these three external shocks alone could amount to
between 2.1 and 4.8 percent of annual GDP in 2020 if the crisis lasts for 3 to 6 months.

While the country’s focus currently is rightly on fighting the health crisis and mitigating its
immediate impacts, planning on how to re-open the economy should also start now.

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