Egypt's Economic Crises: The Way Out and Possible Solutions

The Economic Impact of Tourism in Egypt

Publication Number: ECESWP40-E&A

June, 2000

Author : Sahar Tohamy and Adrian Swinscoe

Type : Working Papers

This paper adopts a comprehensive approach to assess the impact of foreign tourism on the Egyptian economy, which extends beyond their spending on hotels and restaurants. The study uses the economic impact analysis (EIA) methodology to trace direct and secondary effects of foreign tourists’ spending on output, value added, employment, and tax revenue. The results indicate that the impact of foreign tourists’ spending on GDP far exceeds the commonly held figure of around 1 percent. In fact, with respect to value added and output, foreign tourists’ spending is 2-3 times that share and the direct impact of foreign tourists’ spending on total output in 1999 was $ 3.6 billion dollars (4.4 percent of GDP). Adding indirect effects, the total contribution to output reaches $ 9.6 billion (11.6 percent of GDP). As for employment, foreign tourists’ spending directly supported 1.2 million jobs in various economic sectors. The total number of jobs directly and indirectly associated with foreign tourists’ spending is 2.7 million. The study also estimates tax revenue from foreign tourists’ spending at over L.E. 3.6 billion, which corresponds to 5.1 percent of total direct and indirect taxes. The study therefore concludes that tourism’s ability to contribute positively to Egypt’s economic goals earns that activity a higher rank on Egypt’s policy priority list