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Although most Egyptian economic sectors are still feeling the effects of the global economic crisis, Mona El-Fiqi finds the experts -- and figures -- optimistic

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Egyptian experts and government officials last week painted a rosy picture, asserting that the Egyptian economy had not been greatly affected by the global financial crisis. Indeed, they claim that a reduction in the inflation rate to 10 per cent and an increase in GDP by 4.5 per cent means the Egyptian economy is on track to recovery.

The first issue of a monthly Economic Barometer was launched this week by the Ministry of Economic Development in cooperation with the cabinet's Information and Decision Support Centre, the Egyptian Centre for Economic Studies (ECES), and the Faculty of Economics and Political Sciences at Cairo University. The report concludes that most sectors witnessed a decline, including employment rates, local consumption and business confidence. But commodity prices and general economic activity indicators, such as Suez Canal revenues, local production, construction licences and steel sales, are improving.

At a press conference held 11 June, Minister of Economic Development Othman Mohamed Othman said that the aim of the barometer is to follow up on developments in different economic sectors on a monthly basis to help decision-makers take action appropriate to the current situation. Othman added that the results of the first report indicate that initial procedures taken to face the crisis clearly had a positive impact on the economy.

Maged Othman, chairman of the cabinet's Information and Decision Support Centre, explained that the barometer takes as its mean -- at 100 points -- the level of economic performance in 2008 just before the international crisis. The barometer concludes that the general index of economic performance dropped from 99.1 points in February 2009 to 91.8 in March 2009.

According to the barometer, the employment rate registered 86.8 per cent in March 2009 compared to 117.3 in February of the same year. Aliyaa El-Mahdi, dean of the Faculty of Economics and Political Science at Cairo University, explained that the reason follows 7,000 Egyptian expatriates that were forced to return home in March 2009 due to the impact of the international crisis on the Arab and European markets.

"This led to the increase in the unemployment rate from nine per cent in March 2008 to 9.4 per cent in March 2009, as well as a drop in remittances by 15 per cent during the same period." El-Mahdi added.

Also negatively affected is the financial sector, with the EGX30 declining since May 2008 to 4,193.9 points in March 2009. The number of companies being established reduced from 676 in March 2008 to 594 companies in March 2009. Credit facilities in the banking sector declined from 117.5 points in February 2009 to 114.4 in March 2009.

As for businessmen's expectations for the coming few months, ECES Executive Director Hanaa Kheireddin said that the centre conducted a survey that included 237 companies in six sectors, such as industry, transportation, tourism, construction and IT. Some 54 per cent of participants expect stability in total GDP, while 28 per cent are hoping GDP will rise with 18 per cent less optimistic, expecting a reduction in the coming few months. Kheireddin added that the results of the survey "were surprising and show that the negative impact of the crisis is starting to disappear".