Assessing the Impact of Inflation and Economic Growth on Poverty Rates in Egypt

Poverty in Egypt has increased steadily over the past two decades, even during periods of relatively high economic growth. This study examines how inflation, economic growth, and unemployment affect the national poverty headcount ratio over the period 2004–2021. A dynamic Ordinary Least Squares model with a lagged dependent variable is estimated using annual secondary data from the World Bank and CAPMAS. Missing poverty observations between survey years are filled by linear interpolation, and Newey‑West HAC standard errors are employed to correct for serial correlation. The results show that inflation has a statistically significant positive effect on poverty in both the short run (coefficient 0.091, p = 0.034) and the long run (multiplier approximately 0.77). By contrast, neither GDP growth nor the official unemployment rate is significantly related to poverty. The lagged poverty term is large and highly significant (0.882, p < 0.001), confirming strong persistence in poverty outcomes. The findings indicate that price stability is the most effective macroeconomic lever for poverty reduction in Egypt, while growth‑oriented policies alone are insufficient. The study also highlights the limitations of the official unemployment rate as a measure of labour‑market distress in a context dominated by informal employment. These conclusions are robust to a restricted‑sample check using only actual survey years. The research contributes updated, Egypt‑specific evidence and offers practical guidance for policymakers seeking to integrate poverty concerns into macroeconomic management.