LOGIC Consulting

Feb 20, 2022


Egypt has had a negative trade balance for years, and increasing exports is a cornerstone of narrowing the current trade deficit.

The initial devaluation then flotation of the exchange rate in 2016 helped in improving the trade balance as a % of GDP from -14.5% in 2015/16 to -12.8% in 2018/19. Yet, till now export competitiveness remains ,weak and export proceeds are well below those of peer countries & its historical average. Exports of goods and services in 2021 (11.1% of GDP) remains well below the level achieved in 2011 (20.5%).

According to World Bank 2020 Enterprise Survey, less than 10% of private firms in Egypt participate in export activities - either directly, or through sales to exporting companies.

Current Export Status in Egypt:

Low Participation in Global Value Chains (GVCs):

Rather than trading only finished goods, firms today move inputs and intermediate products from country to country in GVCs. About 70% of international trade today involves GVCs.
Yet, Egypt’s participation in GVCs is low compared to its peers, as exports are mainly centered around primary commodities and less sophisticated products.

Low Value-added Products:

Exports remain concentrated in products that are less sophisticated or low value-added.
Between 2009 and 2018, more than half of Egypt’s goods exports consisted of primary and resource based products, and about a quarter consisted of medium and high-technology exports. By comparison, in Turkey and Malaysia, medium- and high-technology exports account for 42% and 58%, respectively.

Weak Export Basket:

Products that Egypt exports most are not necessarily the ones that might be expected from the perspective of comparative advantage. According to a report by World Bank Group, Egypt seems to have a comparative advantage in carpets, fabrics, fertilizers, textiles, salt, sulfur, and stones, but exports of these products remain relatively low.

Highly Concentrated:

Export activity continues to remain, heavily concentrated in a small number of governorates, with the poorest ones appearing to have no linkages to overseas markets. The biggest concentration of exports per worker is in Luxor, Cairo, Alexandria, Port Said, and Dakahlia.

Fewer Products, Fewer Markets:

Egypt exports a smaller number of products to fewer markets than comparator countries. For instance, in 2018 Egypt exported 2,063 products, compared with Turkey’s 4,210. Each product that Egypt exports goes to 9 markets, on average, whereas each Turkish export goes to 30.

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