Distinguished Lectures

Macroeconomic Reforms in Egypt and Resilience to Shocks: Lessons from the Great Recession

Date : 11/25/2010

Speakers : Peter J. Montiel, Williams College

The Egyptian economy has proven to be resilient during the past global economic crisis, with real GDP growth reaching 4.7 percent during 2008/2009 and 5.1 percent for the first three quarters of 2009/2010. Egypt’s resilience to external shocks could be attributed to macroeconomic reforms undertaken over the past decade, as evident by more diversity of sectoral sources of growth, fiscal reforms that availed the space to introduce timely countercyclical packages, and monetary reforms that increased the ability of the Central Bank to weather external shocks and contain domestic inflationary pressures. What are the payoffs from macroeconomic reforms? Whether such reforms yield higher long-term growth has long been controversial. The experience of the Great Recession suggests that other important benefits may have been neglected in the controversy over the growth benefits of reform. Specifically, in contrast with previous international recessions, recovery from the Great Recession has been led by emerging and developing economies, many of which have implemented significant reforms over the past two decades. How much of the resilience of these economies can be attributed to these reforms? Drawing on international experiences, the lecture focused on the desirability of further reforms in Egypt to ensure that the economy is growing at its potential capacity and achieve better diversification and distribution of growth that balance the economic and social agendas and ensure that the benefits of reforms are sustainable going forward.