11 - 17 October 2001
Issue No.555
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Al-Ahram Weekly Online 11 - 17 October 2001 Issue No.555 |
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Looking for answers
How can Egypt improve its economic situation? Sherine Bahaa listened to experts' insights on current economic performance
In a two-hour seminar organised by Egypt's International Economic Forum (EIEF), participants refused to hold the global economic slowdown responsible for the domestic recession. Instead, they blamed the economy's ills on domestic policy.
"We have not been truly integrated into the world economy. So the impact on us from what's happening in the international economy has been limited," said EIEF head Shafik Gabr. He added that "provided current policies change," Egypt will survive the international economic slowdown because its economic fundamentals are solid.
As a businessman, Gabr spoke from the vantage point of someone aware of the ins and outs of Egyptian economic policy. He asserted the need for a more decisive approach to decision- making. "Even if a policy proves wrong -- it is still better than a 'no decision' situation, which really harms the private sector."
To support his argument, Gabr highlighted the government's vacillation over modifying the exchange rate regime. Although indicators suggested the need to change the fixed rate system as early as October 1998, the government only effectively addressed the situation in June 2001 when it decided to have a margin of flexibility in the rate to allow it to partially reflect market realities.
Ahmed Galal, executive director of the Egyptian Centre for Economic Studies (ECES), focus instead on Egypt's economic achievements. "We got it half-right," said Galal optimistically. He added, "We are doing better than before in almost all areas. It is a mistake to take the present slowdown or depression as a reason for dismissing the [successes attained so far through] reform, although there is more to be done."
Enumerating some of these accomplishments, Galal said, "We activated our economy. We promoted exports, although not sufficiently, and the private sector has become engaged in economic activity -- although not to the extent that we wanted."
Galal stressed the importance of a sound exchange regime to increase exports and attract foreign investment. "Domestic savings relative to GDP are about 20 per cent. This is completely inadequate [for economic growth]," Galal said.
Mahmoud Mohieddin, who advises the minister of economy and external trade as well as the National Democratic Party's economic committee, agreed with Gabr and Galal's assessments generally, conceding that the government should have responded more swiftly to economic changes with new or modified policies.
Mohieddin asserted the need for more comprehensive information upon which to base policy decisions. He lamented that in spite of the considerable economic expertise in Egypt, crucial information is not being produced and published on the economy at any of the sites one might expect it to come from, such as academic institutions or non-governmental research centres. In this regard he hailed the idea of establishing a research centre at the Central Bank.
Forecasts on economic growth worldwide this year suggest that it will be 2.2 per cent, down from 4.7 per cent in 2000. For 2002, growth is forecast at 1.5 per cent.
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