ECONOMY OVERVIEW
Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. In the last 30 years, the government has reformed the highly centralized economy it inherited from President NASSER. In 2005, Prime Minister Ahmed NAZIF reduced personal and corporate tax rates, reduced energy subsidies, and privatized several enterprises. The stock market boomed, and GDP grew about 5% per year in 2005-06. Despite these achievements, the government has failed to raise living standards for the average Egyptian, and has had to continue providing subsidies for basic necessities. The subsidies have contributed to a growing budget deficit - more than 10% of GDP each year - and represent a significant drain on the economy. Foreign direct investment remains low. To achieve higher GDP growth the NAZIF government will need to continue its aggressive pursuit of reform, especially in the energy sector. Egypt's export sectors - particularly natural gas - have bright prospects.