I have been recently intrigued by Egyptian economy including the
aftermath the economy went under, the dynamics of the interplay of the military
government and the appointment of the new government. It was an interesting
affair for me as it was one of the first in history where an economy of 86
million people with a GDP of USD 576 billion and a per capita income of USD
6,800 would go through a phase like this.
Looking through the statistical data, one would just fall in love with the
behavior of the policy and non-policy matters when run through a Bayesian model.
Egyptian monetary policy has been focusing on stabilizing the price
of the exchange rate which were critical to keep the interest of the
international investment community afloat. Egypt has been on an economic
trajectory very much similar to a country which I believe to understand in and
out, India (considering this is my blog, have the freedom to say so :P).
Both the countries have been trying to control or rather balance the equation of raising foreign competitiveness, increasing the economy with flush income growth and promoting exports. The one divergence which they both were experiencing was the ability to infuse confidence of the larger countries on their own national currencies. India didn’t do well with a nonchalant attitude on where it exchange rates went to, compared to a Egyptian economy which were on their feet to guard its exchange rates including the build up to the turbulent times before the Crisis and thereafter.
What did the undoing for the Egyptian economy was the diverse price distortions it has experienced for decades, fortunately, the realization for the stakeholders of the economy about the distortion will bring about a relative price corrections which will help in the smoothening the transition and helping in formulating a mature social market economy.
Both the countries have been trying to control or rather balance the equation of raising foreign competitiveness, increasing the economy with flush income growth and promoting exports. The one divergence which they both were experiencing was the ability to infuse confidence of the larger countries on their own national currencies. India didn’t do well with a nonchalant attitude on where it exchange rates went to, compared to a Egyptian economy which were on their feet to guard its exchange rates including the build up to the turbulent times before the Crisis and thereafter.
What did the undoing for the Egyptian economy was the diverse price distortions it has experienced for decades, fortunately, the realization for the stakeholders of the economy about the distortion will bring about a relative price corrections which will help in the smoothening the transition and helping in formulating a mature social market economy.
We can divide the whole Egyptian embroglio into four stages:
1. The build up to the monetary infusion (2003).
2. The Interbanking exchange rate mechanism.(2005-2007)
3. The Egyptian Crisis and Mubarak Government fiscal and monetary
policy (2004-2009).
4. The Recovery path stage after the Crisis. (2009-2014)
…..
