Egypt’s economy, already grappling with years of instability, faces even greater challenges as the ongoing war in Gaza adds new layers of strain. The escalation of violence between Israel and Palestinian forces—alongside heightened tensions with regional neighbors—has further complicated Egypt’s path to economic recovery and reform.

Economic Pressures Before the Conflict

Egypt has been wrestling with economic troubles for years, including high inflation, a depreciating currency, mounting debt, and rising unemployment. The government’s efforts to attract foreign investment and stabilize the Egyptian pound through IMF-backed reforms have struggled to gain traction. Subsidy cuts, currency devaluation, and austerity measures have provoked public dissatisfaction, leading to widespread discontent.

Fallout from the Gaza Conflict

The war in Gaza now threatens to derail these already fragile efforts. Egypt shares a border with Gaza, and the Rafah crossing, a crucial humanitarian gateway, has become the focal point of international pressure to allow aid. While Egypt plays a delicate diplomatic role in mediating between parties, the conflict has disrupted trade routes, limited tourism—one of Egypt’s key economic sectors—and heightened regional risks, driving away foreign investors.

In addition, security concerns along the border are prompting Egypt to increase military spending, further straining public finances. Energy imports and supply chains may also face disruptions, intensifying the economic crisis.

A Bleak Outlook

With tourism hit hard by both the conflict and currency instability, along with a reduced flow of remittances from Egyptians working abroad due to regional tensions, Egypt’s fiscal position continues to worsen. Talks of new reforms are ongoing, but the conflict has slowed down implementation, leaving the government in a precarious position. Analysts warn that social unrest could increase if the economic conditions continue to deteriorate.

As Egypt finds itself at the intersection of geopolitical turmoil and domestic economic challenges, the road ahead looks increasingly difficult. Without swift stabilization in the region and renewed international support, the prospects for recovery may remain elusive for the foreseeable future.