Tuesday,24 October, 2017
Current issue | Issue 1207, (24 - 30 July 2014)
Tuesday,24 October, 2017
Issue 1207, (24 - 30 July 2014)

Ahram Weekly

A misleading increase?

Egyptian non-oil exports increased slightly over the last two months but not enough to constitute a real revival, writes Mona El-Fiqi

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Al-Ahram Weekly

For the second consecutive month, Egyptian non-oil exports rose in June to push overall export revenues during the first six months of 2014 to $11.841 billion. This is 1.2 per cent higher than the figure in the first half of last year.

The improvement was registered in both May and June, which witnessed a change in the trend that prevailed in the first four months of the year when exports were on the slide.

Exports fell by four per cent in both January and February to reach $1.7 billion and $1.77 billion, respectively. The decline accelerated to reach five per cent in March, earning $2 billion, and to 11 per cent in April, to $1.8 billion.

The value of exports during the first six months of 2014 accounts for 47.36 per cent of the government’s target, put at $25 billion assuming a dollar exchange rate of LE7. The current exchange rate is LE7.17.

Moreover, the number of exporters during the first half of 2014 increased by 629 to reach 6,164. According to the Ministry of Trade and Industry, exports by newcomers accounted for two per cent of total exports in the same period.

The newcomers are exporters who have not exported for three consecutive years and whose exports now exceed LE1 million.

The Arab states received the largest share of the value of exports at $5 billion, followed by EU countries with $3.5 billion. US imports from Egypt were $605 million.

Saudi Arabia topped the list of importers, followed by the US, Italy, and Turkey.

The largest export sectors during the first half of 2014 were plastics, valued at LE5.59 billion, and fertilisers, at LE2.9 billion. Cast iron and steel, cables, car parts and cosmetics were other important export products.

Khaled Abdel-Maqsoud, marketing manager at Evergrow Fertilisers, told Al-Ahram Weekly that export rates had increased by 29 per cent during the first six months in 2014 due to high demand in the international markets.

However, he complained that fertiliser producers still faced too much bureaucracy, a problem that he said the government must try to solve.

Leather exports in the first half of 2014 rose by 23 per cent to reach $117 million. Exports of textiles, medical and pharmaceutical products and food also increased.

Hanaa Kheireddin, a professor of economics at Cairo University, said that the slight increases were not a positive indication of a recovery in the exports sector since the problems facing the sector remain unsolved.

According to Kheireddin, there had been no increase in production or in Egypt’s competitiveness, with the rise in exports stemming instead from an increase in the international prices of some products or the higher exchange rate for foreign currencies.

Meanwhile, the first half of 2014 saw a 30 per cent decline in exports of building materials, from $2.79 billion to $1.95 billion.

Books and textbook exports dropped 24 per cent from $14 million to $11 million, while the export of garments decreased by three per cent.

Mohamed Qassem, chairman of the Readymade Garments Exports Council, told the Weekly that there was no reason for the garments sector to grow.

“There is no demand in the international markets, and thus there is no expansion in investment. The decline of three per cent is considered an acceptable rate in such circumstances. The best we can do now is to keep our clients and Egypt’s share in the international markets,” Qassem commented.

Exporters are not optimistic since competitiveness is expected to be reduced, according to Qassem, as a result of higher energy prices due to the reduction in subsidies and higher labour costs.

The reduction in financial support provided by the Export Development Fund from LE3.1 billion to LE2.6 billion would also have a negative impact on exporting sectors, Qaseem said.

Metal exports declined by 29 per cent during the first half of 2014. Mohamed Hanafi, manager of the Metallurgical Industries Division at the Federation of Egyptian Industries, said that the decline had come despite metal exports being among the highest over the past five years.

Hanafi said that proceeds from steel exports had reached $261 million in the first six months of 2014, while they were $893 million in the whole of 2013.

The reason behind the drop was the reduction of metal prices in the international markets, in addition to the political instability that Egypt has been living through since the 25 January Revolution, he said.

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