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2 - 8 November 2000
Issue No. 506
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Little optimism

By Mona El Fiqi



Little optimism A prominent Egyptian economic research centre has released a report predicting a low level of economic growth during the coming period. Mona El Fiqi highlights its main findings.

Topping the evidence martialled by the Egyptian Centre for Economic Studies (ECES) concerning its forecast, is a sharp decline in production by the manufacturing and construction sectors during the first half of the year 2000.

The downturn in these sectors is evidenced by indicators such as a decrease in consumption of cement and industrial electricity, as well as a decline in imports for these sectors. Three quarters of manufacturers participating in the study said their production in the first half of 2000 was either the same or lower than in the previous six months. Slower sales in both the local and international markets account for this decline, writes the ECES.

An economy-wide downturn was manifested in the liquidity shortage. This was exacerbated for a time by the government's attempts to maintain a stable exchange rate during a period when there was an excess demand for foreign exchange.

The report suggests that the government's recent flexibility on the exchange rate, as well as the recovery of the tourism sector, are positive signs indicating that the liquidity problem may eventually be alleviated.

Another indication of slower economic growth is the modest drop in the number of companies established during the past year.

In contrast to the upward trend of sales in 1999, the report shows an appreciable decline in sales at home and abroad in the first half of the year 2000. While the majority of respondents were optimistic about sales in the domestic market during the second half of the year, predictions concerning exports were guarded. Respondents in the spinning and weaving, chemical, transport and leather industries said they expect sales to the international market to remain static or decrease.

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