Poverty & Equity Brief October 2024 ARAB REPUBLIC OF EGYPT Official government estimates using the national poverty methodology showed that 29.7 percent of the Egyptian population was poor in 2019, before the onset of the COVID-19 pandemic. In addition, the World Bank uses a different poverty line as a benchmark for lower middle-income countries, the group to which Egypt belongs. Based on the $3.65 per day (2017 Purchasing Power Parity) poverty line for lower middle-income countries, an estimated 17.6 percent of Egyptians were poor in 2019. Although GDP per capita grew positively from 2015 to 2019, annual median income and consumption per capita were declining, primarily due to an inflationary spike in 2016/17. External shocks—including the COVID-19 pandemic, Russia’s invasion of Ukraine, and the escalation of conflict in the Middle East—and economic imbalances have hampered economic recovery and likely reversed the earlier poverty reduction gains between 2017 and 2019. Compounding crises with disrupted supply chain and shockwaves from the Middle East conflict constrain economic growth, and these factors together with the devaluation of the Egyptian pound have led to high inflation since 2022. Egypt is pushing through macroeconomic stabilization and structural reforms. Headline urban inflation has been on a declining trend though it remained in double digits at 25.7 percent in July 2024. Food items (54.7 percent inflation in FY24) are the main driver of the headline rate and account for over 44 percent of household expenditures among the bottom quintile. This is expected to exacerbate the pre-existing socio-economic challenges that are mostly affecting the poor and most vulnerable households. High inflation remains a key source of concern for poverty reduction efforts in the near term. Poverty is estimated to have increased due to the high inflation in 2023, though this impact has been partially mitigated by several rounds of government compensatory measures, mostly pro- poor cash transfers. The measures announced in February 2024 included increasing pensions and public sector wages, cash transfers to Takaful and Karama beneficiaries, as well as increasing the minimum threshold of income tax. In June 2024, the government reduced bread subsidy for the first time in over three decades, quadrupling the price of subsidized bread. Scaling up well-targeted social assistance would be important to protect the poorest, including during price increases. With a young and growing population, increasing needs for employment may imply further challenges to the labor market, which already faces high informality, a growing share of the working-age population out of the labor force, and low female labor force participation and youth employment. In this challenging environment for Egypt, there is a need to improve the economy's ability to create jobs, reduce households' exposure to risks, and improve their ability to cope with shocks. $2.15 Poverty Rate $6.85 Poverty Rate Gini Index Prosperity Gap 2019 2019 2019 2019 1.5% 68.8% 31.9 5.0 Poverty Rate Inequality 80 70 60 60 50 Poverty Rate (%) Gini Index 40 40 30 20 20 10 0 0 2000 2005 2010 2015 2020 2000 2005 2010 2015 2020 $2.15 Poverty Rate $3.65 Poverty Rate $6.85 Poverty Rate Gini Index Poverty at Different Lines Poverty Line Number of Poor Rate Year (Thousands) (%)   National Poverty Line 31,368.7 29.7 2019         International Poverty Line ($2.15/day) 1,549.4 1.5 2019         Lower Middle Income Class Poverty Line ($3.65/day) 18,614.4 17.6 2019         Upper Middle Income Class Poverty Line ($6.85/day) 72,624.1 68.8 2019         Multidimensional Poverty Measure   2.3 2019         Group and Multidimensional Poverty Poverty by Group Poverty Rate (%) Multidimensional Poverty Components (% of Pop.)   Urban population 12.1 Daily income less than US$2.15 per person 1.5 Rural population 21.5 At least one school-aged child is not enrolled in school 3.7 Males 17.3 No adult has completed primary education 9.9 Females 18.0 No access to limited-standard drinking water 0.3 0 to 14 years old 24.8 No access to limited-standard sanitation 2.4 15 to 64 years old 14.6 No access to electricity 0.2 65 and older 6.6 Without education (16+) 20.7 Primary education (16+) 18.4 Secondary education (16+) 14.8 Tertiary/post-secondary education (16+) 4.4 Note: Data for the "Poverty by Group" table is derived from a 2019 survey and data for the "Multidimensional Poverty Components" table is derived from a 2019 survey. The rates in the "Poverty by Group" table above are shown at the $3.65 lower-middle income line. "N/A" denotes a missing/removed value, while "N/A*" refers to a value which was removed due to having fewer than 30 observations. Poverty Data & Methodology Poverty and inequality estimates in Egypt are produced by the Central Agency for Public Mobilization and Statistics (CAPMAS). CAPMAS collects a nationally representative household survey (HIECS) on average every two years. The welfare aggregate is based on consumption and not temporally deflated. The official poverty measure is based on a household-specific poverty line that considers: (1) household composition and thus household-specific caloric requirements and (2) regional variation in cost/calorie and non-food allowance. This method leads to thousands of poverty lines. The methodology to measure welfare changed in 2015, and caution should be used when comparing with pre-2015. The real value of the poverty line is not fixed and a new poverty line is estimated for each survey round. The HIECS 2017-18 was conducted between October 2017 and September 2018. HIECS 2019-20 was scheduled between October 2019 and September 2020. However, it was concluded after the first half due to COVID-19. Official poverty estimates were announced in December 2020 using only half-a-year of data, thus unable to capture seasonality of consumption across the full year. It also does not reflect the likely change in consumption patterns in the second half of the year due to COVID-19. Harmonization The numbers presented in this brief are derived from the MNAPOV database. The standardization and harmonization process are overseen by the Middle East and North Africa Team for Statistical Development. MNAPOV was established in 2014, and encompasses a range of data, including demographics, education, asset ownership, access to services, employment, and household expenditure, all of which are utilized for Global Poverty Monitoring. MNAPOV includes data from 11 countries. Work is ongoing to improve the coverage of countries in the region, expand the list of harmonized variables, and enhance the dissemination of poverty, inequality, and prosperity estimates for the MENA region. The terms of use for the data comply with agreements made with the original data producers. Middle East & North Africa Poverty Economist: Imane Helmy / Trang Van Nguyen