The socio-economic impact of COVID-19 on the petroleum sector in Egypt: a descriptive analysis

Abstract

This study explored the impact of COVID-19 on the petroleum sector in Egypt, both economically and socially. Of all sectors of the economy, the oil industry has been one of the most negatively impacted by the pandemic, with oil prices plummeting at the start of the pandemic. Use to decrease demand. This paper aimed to analyse the main economic and social effects of the pandemic on the Egypt oil industry through an examination of the macroeconomic data reflected in the Egyptian balance of payments, the country's general budget and the oil industry's performance data. The study also conducted a survey of a set of workers from the Egyptian petroleum sector. The study thus concluded two levels of analysis; a macrolevel and a micro level analysis of the effect of COVID-19 on the Egyptian oil industry. The paper builds upon the experience gained from evaluating market change caused by COVID-19 (Agosta et al., 2020), to analyse the socioeconomic implications of COVID-19 on the Egyptian oil industry. This study employed a survey analysis of questionnaires filled by on a sample of workers in the petroleum sector in Egypt. Data were analysed using the SPSS software, version 18.0. Descriptive analysis was reported as frequencies and percentages. The macroeconomic impact analysis was done by analysing macro-economic data pertaining the oil industry's levels of production as well as the data pertaining to Egypt's external balance of payment and public finance. The paper concludes that although the COVID-19 pandemic had negatively impacted the socioeconomics of oil sector workers, reducing their incomes and costing them jobs, these effects appeared to be short term effects that could be minimised with the end of the pandemic and be mitigated through the adequate social and economic policies. No permanent socioeconomic losses were thus deemed to be a serious concern with respect to these workers. The study also concluded that, macroeconomically, lower global oil prices has had a net positive effect on the Egyptian economy as the causing an expected shrinkage of the overall trade deficit. It also has reduced the national budget deficit and has helped mobilise money into the economy, financing both investments and social expenses. The survey was very hard to reach, where lot of workers in the petroleum sector (governmental) refused to answer the questions. Some African countries may not have all the necessary most recent data of economic indicators needed to ascertain with certainty the economic impact of the COVID-19 pandemic. And, at the event that data are completely available, analysts must consider that any worsening of the economy may not stem directly from the pandemic itself. Causality has to be clearly established. The survey therefore focused on the attitudes and perceptions of oil sector workers, irrespective of whether a given indicator had been affected by the pandemic or is seen likely to be affected by it in the future. All those responding have reported the belief that economic indicators, such as GDP growth, inflation and trade had been impacted negatively by the spread of COVID-19. They also believed the effects of the pandemic on transport to have had direct effects on the oil industry. The social impact of the pandemic was less apparent, particularly among governmental sector workers compared with those in the private sector. However, freelancers have reported some issues that may be become more apparent through aggregated data. This study has presented some preliminary estimates of the impact of the COVID-19 outbreak on petroleum sector in Egypt. The goal was not to be definitive about the virus outbreak, but rather to provide information about a range of possible economic costs of the disease. While, a detailed quantification of the socioeconomic impact of the coronavirus pandemic may not be feasible, it is still useful to identify possible transmission channels through which the pandemic may affect the Egypt economy and society. It is also useful to identify key issues that are likely shape short- and medium-term socioeconomic prospects in Egypt as a result of the COVID-19 pandemic outbreak in Egypt.