Egypt 2009 in review - December News- Posted on 30st of December 2009
The year 2009 demonstrated that Egypt can rely on its own domestic market to drive growth and that its expanding economy and population appeal to investors even in tough financial conditions. This year was not as bad as it was expected, though the question remains whether relative stability post-crisis will matter in the long run.
In May, Investment Minister Dr. Mahmoud Mohieldin called Egypt's 4.3% in the third quarter of the fiscal year "a breakthrough," reversing the downward trend that saw growth fall from 5.8% in the first quarter to 4.1% in the second quarter. Growth for 2010 is projected be around 5%.
According to a Business International Monitor report, "In terms of GDP by industry, only two sectors saw output contract in the first nine months of the year: Suez Canal activity declined by 1.5%, and oil refining fell by 3.2%." Most of other sectors saw positive growth, with construction and communications outperforming, expanding by 11.6% and 15%, respectively.
Earlier this month, Minister of Investment Mahmoud Mohieldin said economic growth is set to meet official forecasts of a 5% in fiscal year 2009/10. The budget deficit could be well below the officially forecast 7% of GDP. The money market, as measured by inflation and interest rates, experienced high levels of vigilance. After repeatedly cutting interest rates since February to boost growth, the Central Bank of Egypt
(CBE) finally kept them at 9.75% in November for lending and 8.25% for deposits. The government saw that inflation had gone down for two months and immediately stopped cutting interest rates. Now inflation is up again and the cost of staple items is up.
Inflation as measured by CPI (Consumer Price Index), registered 13%.
Urban inflation, the price indicator watched most closely, hovered slightly higher, reaching 13.3% in November after months of decline from an all-time high in late 2008. Officials predict, however, that inflation will finish off the fiscal year between 6-8%.
As of December, the labour market as measured by unemployment, was at 9.37%, although some experts argue that it is much higher, particularly in terms of under-employment.
Foreign Direct Investment (FDI) in Egypt will reach its $10 billion target for fiscal year 2009/10, according to Egypt's Minister of Investment. FDI inflows came to $5.2 billion in the July-March period, down sharply from the $11.2 billion recorded in the same period of fiscal year 2007/08. According to BMI, "The single largest source of FDI over recent years has been the US, but flows have slowed considerably, as that economy has contracted."
The Gulf states are important investors as well, but here too inflows have fallen, on the back of a renewed focus on domestic economies by GCC governments and sovereign wealth funds, in the wake of the oil price collapse.
The Economist 2009 Intelligence Unit predicts an average growth of real GDP per head of 4.4% for the next 20 years, a figure that is insufficient to provide for increases in population and labour market.
EIU mentioned that "a faster pace of economic reform, including measures to increase labour market flexibility" could potentially "raise productivity and lift Egypt's growth to much higher levels."
All in all, 2009 brought a combination of pleasant surprises and expected challenges. 2010 will begin with more hope than its predecessor!
For the new year, we have changed the layout of our monthly 'Business in Brief' bulletin to better serve your information needs. The economic and trade affairs team look forward to continuing to give you the inside track on business in Egypt.
I take this opportunity to wish you a happy, healthy and prosperous 2010 and beyond.
Navigating the Credit Crunch- posted on 6th of November 2009
US President Obama speech in Cairo- posted on 4th of June 2009
In a historically unique speech, US President Barack Obama calls upon the world to build bridges of tolerance, dialogue and economic cooperation as interdependence stands at the core of a new beginning. Stressing the importance of globalization and its spread to every corner of the world, specifically the Muslim nations, Obama refers to Muslim geniuses who excelled in their contribution to the enlightenment of human kind. Never before has the world been in such dire need to engage in economic cooperation as today, to be achieved by developing investment opportunities between the US and Islamic nations. Consequently, as Obama vowed, the launching of new funds of science and technology to support technological development in Muslim-majority communities as well as the opening of centers of scientific excellence in the Middle East will undoubtedly increase foreign investors' endeavor to seize investment opportunities in Egypt, thereby ensuring its' place as the top recipient of FDI among African and Middle Eastern countries.
Moreover to ensure excellence in achievement of investment projects it is of dire necessity to have professional matchmaking companies whose years of experience and careful evaluation process will bring together ambitious investors and the most lucrative investment opportunities. Thus Triple-E Fund will find itself entering the stream of dynamic international investment business in the near future, thereby enhancing cooperation and obliterating hindrances which are otherwise expectable.
US President Obama speech in Cairo- posted on 4th of June 2009
Furthermore Obama's planned summit on entrepreneurship, intending to deepen ties between economic foundations and business leaders will further increase the necessity of specialized funds, such as have been created by Triple-E Fund, enabling prosperousness and effectiveness to become the core ingredient of success in investment business.
To sum up, Obama's enthusiastic endeavor and appeal to the leaders of the world to recognize the utmost importance of global interdependence and the resulting prosperity linked to it, render funds like Triple-E Fund indispensible. Through specialized funds, and a team of profound expertise and astuteness, investment business carried out in Egypt will be given a reformative dynamic.
Steadfast Alliance will match the most promising investment projects with highly esteemed companies, thereby adding its share to global economic development.
In his utterly impressive speech at the highly-esteemed University of Cairo, US President Barak Obama revealed 7 points of tension that have set separations between the Western and the Islamic World. Now the time has come to join forces and confront these sources of tension together, in order to allow for a new beginning of mutual interest and respect to dominate the relationship between the West and the Islamic World. These sources of tension are the following:
1st tension: Violent extremism in all of its forms
Obama clearly states that America is not and never will be at war with Islam. However as US President, he views it as his primary duty to protect the American people and will therefore confront violent extremisms in all its forms. In order to battle violent terrorism, Islamic nations must participate in this endeavor as Islam actually constitutes an important part in promoting peace.
2nd tension: Issue concerning Palestinians, Israelis and the Arab world
While stating that America's bond with Israel is unbreakable, Obama promises that the US will not neglect the Palestinians and pursue the realization of a two-state solution which will bring peace and security not only to the Palestinians and Israelis, but also to the entire globe. For peace to take the upper hand though, it is vital that the Palestinians seize violence and terrorism and that both parties live up to their obligations which are clearly stated in the Road Map. Moreover the US doesn't accept the legitimacy of continued settlements, which undermines efforts to achieve peace. Not violence and terrorism, but rather peaceful approaches will generate the long-awaited peace and will eventually lead to a stable and pacific co-existence.
3rd tension: Shared interest in rights and responsibilities of nations on nuclear weapons
The issue regarding Iran's pursue of nuclear power has been the primary source of tension in the contemporary relationship between the US and Iran. Obama declares that no single nation should have the authoritative power to decide which nations should be allowed to own nuclear weapons and which should be deprived of that right. Moreover the US will advocate a commitment to a world in which NO nation has the right to own nuclear weapons, but a world in which all nations should have the right to access peaceful nuclear power as long as it complies with the responsibilities under the non-proliferation- treaty.
4th tension: democracy
Obama is aware of the controversy about the promotion of democracy in regards to the War on Iraq and further states that no system of government should be imposed by one nation on another. However simultaneously the US believes in the ultimate yearn of people all around the globe to freedom of speech, equal administration of justice, confidence in the rule of law and to a transparent government that doesn't steal form the people. Consequently it is known that governments that protect the aforementioned rights are ultimately more stable, successful and secure and therefore the US strongly supports a country's yearn for democracy. Obama appeals to governments around the world that they must maintain power through consent, respect the rights of minorities, participate with a spirit of tolerance and compromise and place the interests of their people and legitimate workings of political processes above their parties.
5th tension: religious freedom
Obama expounds that Islam has a long tradition of tolerance, having flourished during the times of Andalusia and precisely this spirit is urgently needed today, which should allow all people in all countries to choose and live their faiths based upon the persuasion of the mind and soul. Such a kind of tolerance is essential for any religion to thrive, however it is being challenged in many different ways such as the division between Sunnis and Shia'as that has led to tragic events in Iraq. He further explains that freedom of religion is central to the ability of people to live together and that is the reason why the richness of religious diversity must be upheld. In order to bring people of different faiths together, the US has created a model of so-called Service projects, addressing religious, social and cultural issues in their communities. More such efforts must be aimed at in the whole world, as interfaith dialogues can be turned into interfaith services, and thereby bridges between people can lead to a united effort and effective action such as humanitarian relief assistance following natural disasters.
6th tension: women's rights:
Concerning women's rights, Obama believes that a woman who is denied education is denied equality and that the fight for gender equality is not only existent in the Islamic world but remains a problem in western countries as well. Championing the realization of gender equality, Obama argues that the world's common prosperity will be advanced by allowing human kind to reach its' fullest potential which includes women's education since countries that have more educated women, are in essence more prosperous. In that sense, the US will partner with any Muslim-majority country to support expanded literacy for girls and assist women pursue employment through micro-financing special projects.
7th tension: economic development and opportunity
Obama understands that globalization seems contradictory to many as the internet and international TV can be informative but can also bring violence into peoples' homes. In the same sense, trade can bring new wealth and opportunity but also disruptions and change in communities and this change in turn can induce a fear that modernity will make us lose control over our economic choices, politics, and our identities, which are essentially the basic principles we cherish the most. However, Obama elaborates that human progress cannot be denied and there need not be a contradiction between development and tradition, which becomes evident in the cases of Japan and South Korea, whose economies grew enormously while maintaining a distinct culture.
Measures and precautions - H1N1 in Egypt
As the H1N1 virus has spread throughout the world, the Egyptian government has taken severe precautions to protect its' people from the virus such as ordering the slaughtering of all 300.000 - 400.000 pigs currently available in the country on the 29th April. Thanks to this swift reaction, reported cases of H1N1-infected people could be kept at an extreme minimum of only 18 cases. As the patients have been given immediate medical treatment, they have recovered quickly and thus the scope of transmission and the medical consequences were maintained at a low level.
Moreover, passengers arriving in the country are examined by a quarantine staff and any suspected cases are immediately dealt with. Also the government continuously informs its people through grand broadcasts that it provides medical services free of charges for any individual showing the symptoms. Given these severe measures, Egypt has proved to have effectively dealt with the first cases of H1N1 virus, thus ensuring that the spread and severity of the virus will be kept at a minimum.
Egypt to rise in A.T. Kearny Global Services Index - Geography of Offshoring is Shifting,
According to A.T. Kearney StudyIndia and China continue as top offshoring destinations; but Central/Eastern Europe falls while Southeast Asia and Middle East countries rise
Chicago (May 18, 2009) - Deteriorating cost advantages and improved labor quality are driving a dramatic shift in the geography of offshoring according to the latest edition of global management consulting firm A.T. Kearney's Global Services Location Index (GSLI), a ranking of the most attractive offshoring destinations.
While India, China and Malaysia retain the top three spots they've occupied since the inaugural GSLI in 2004, a fundamental shift in the index has taken place as once strong Central European countries have yielded ground to countries in Asia, the Middle East and North Africa.
India, one of the first countries to invest in Egypt - July 2007
