Tourism, a key growth sector, is still recovering from the effect of the November 1997 extremist attack against tourists visiting Luxor, in which 58 foreigners died, and an apparently unrelated bus bombing in downtown Cairo that killed 10 in September of that year. Reaching the economic growth target will depend, in large measure, on the ability of Egyptian Government and business leaders to stick to the country's structural reform program and to deal with surprises that will increasingly affect Egypt as it becomes more integrated in the global economy. While exports and foreign direct investment figures increased, both are still low by comparison with other emerging markets. Events of the last several months suggest that the government's structural reform efforts may be back on track after last year's slowdown. The need for Egypt to implement changes so as to come into full WTO compliance by 2005 also provides an impetus for reform.
Tourism is Egypt's top foreign exchange earner.
Tourism receipts decreased since last fall because of two high-profile extremists attacks against tourists in Cairo and Luxor. The number of tourists appeared to be back on the upswing in mid-1998. Private investors have concentrated on projects along Egypt's Red Sea Coast, which offers inexpensive year-round sunbathing for European package tours. Suez Canal receipts have grown slowly in recent years. Competition from alternative routes and oil pipelines, a decrease in the number of car transports, and the effect of the East Asian economic downturn are among the factors squeezing canal revenues.