Assessment of The Impact of Inflation on The Performance of The Agricultural Sector in Egypt From 2010 To 2023..

The agricultural sector is one of the main pillars of the Egyptian economy, contributing significantly to the gross domestic product (GDP). It represents approximately 12.47% of Egypt's GDP in 2023, with total agricultural exports amounting to approximately $8.9 billion in 2023, representing approximately 25% of total commodity exports of approximately $35.6 billion. Despite this, the sector faces numerous economic challenges, most notably inflation, a macroeconomic phenomenon affecting productivity, prices, and costs. Inflation is considered one of the most serious problems facing Egypt.
The main objectives of the research were to evaluate the impact of inflation on the performance of the agricultural sector during the periods (2010-2016) and (2017-2023) using both the geometric mean and the compound annual growth rate. The results showed that during the first period, the geometric mean of the percentage of total agricultural production to GDP (as an indicator of agricultural sector performance) reached about 15.21%, and the compound annual growth rate decreased during the same period for the percentage of total agricultural production to GDP by about 3.84%. This is due to several reasons, including political instability after the 2011 revolution and the subsequent political and security strikes that led to weak oversight and widespread encroachment on agricultural land. As for the second period, there was a decrease in the geometric mean of the percentage of total agricultural production to GDP, reaching about 11.92%, with an increase in the compound annual growth rate for the same indicator compared to the first period, reaching about 4.70%. This decrease is due to the decline in the value of the Egyptian pound against the dollar in the so-called floating policy, especially in 2017.
When evaluating the impact of inflation on the performance of the agricultural sector using the Autoregressive Distributed Lag (ARDL) model for cointegration, the results showed that a 1% increase in the inflation rate led to a decrease in the percentage of agricultural production to the GDP by about 0.09%. High inflation represents a burden on the agricultural sector and reduces its ability to contribute to the GDP. The results also showed a long-term relationship between the percentage of total agricultural production to the GDP and the inflation rate. This was proven through the error correction coefficient, which had a statistically significant and negative value of about (-0.2523), which explains that about 25% of the errors that occur between variables in the short term are corrected in the long term.