Egypt has been a rising star among emerging economies in recent years. Even though several reforms remain to be completed, the reform program launched in 2016 has started to bear fruit with economic growth of over five percent in the last two years. As a sign of increased stability, the tourism sector recorded its highest revenues in 2018/19. Continued efforts aimed at improving Egypt's business climate were expected to lead to even stronger private sector growth and economic diversification in 2020 and beyond. Egypt's recent economic success and on-going reform efforts will almost certainly be interrupted by the COVID-19 pandemic. While the government is taking actions to contain the spread of the virus and the number of reported infections in Egypt is currently (March 2020) low compared to levels of infection in many other countries, developments in the global economy are expected to have major knock-on effects for Egypt. International travel restrictions are already curtailing tourism to the country. Moreover, the slowdown in global economic activity is likely reducing payments received from the Suez Canal and remittances from Egyptians working abroad. These three sources together account REGIONAL PROGRAM POLICY NOTE 04 MARCH 2020Egypt'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.

The economic impacts of the COVID-19 crisis are increasingly hitting low-and middle-income countries and the poor. International travel restrictions and the full or partial closure of businesses and industries in Asia, Europe, and North America have led to a collapse in global travel and are expected to reduce the flows of remittances. Tourism and remittances are important sources of employment and incomes for the poor. This post assesses the potential impacts of the expected reductions in these income flows by using Egypt as a case study.