Modelling Unit

Motivation:

During the past few years, the Egyptian economy has embarked on implementing an ambitious agenda for economic structural reforms, to achieve higher GDP growth rates and enhance sustainable development goals. However, Egypt is also facing many challenges, that might hamper the steady implementation of the intended reforms. There are domestic and external challenges. Domestic challenges include for example, limited water resources and climate change, as well as other domestic constraints etc… External challenges refer to external shocks or crises such as Covid-19 pandemic, which is considered as an unprecedented health crisis with immense negative economic repercussions, leading to a worldwide economic downturn. Also recently, the Ukraine Russian war, has led to multiple economic disruptions on the global level, especially for the countries which were heavily relying on importing food products, namely wheat and cooking oil. This crisis has generated inflationary pressures worldwide. In Egypt, food prices have witnessed a notable hike during the last month, increasing by more than 30%, according to CAPMAS data.

But more detailed analysis regarding the possible dynamic repercussions of such economic policies and external shocks is required to inform governments and international partners. Moreover, longer-term structures need deeper investigation and analysis to enable Egypt to be better prepared for future shocks and challenges.

Hence, there is a need to conduct policy analysis and forecasting to support the Government of Egypt in effectively assessing economic policies and external shocks in a structured and evidence-based way. Rigorous policy analysis requires utilizing advanced methodological tools in order to provide evidence-based solutions. These tools might include using macro-econometric modelling techniques or economy wide modelling such as CGE models, that help in designing policy scenarios and simulations. In addition, System Dynamics approach will be applied.