CAIRO: Egypt’s economy grew by 4.3 percent in the third quarter of the current fiscal year, an unexpected development that Investment Minister Mahmoud Mohieldin called “a breakthrough.
Economists were surprised to see a reversal in the downward trend, which saw economic growth fall from 5.8 percent in the first quarter to 4.1 percent in the second quarter.
The numbers are also down from a high average of 7.2 percent last year, a decline largely attributed to the effects of the global economic crisis.
Despite expectations of a continued slowdown, construction, telecommunications and transportation reportedly expanded, the Ministry of Economic Development said in a statement.
The numbers indicate a slight recovery in the tumultuous economic environment, Mohieldin told Al-Shorouk daily newspaper.
The new growth numbers surprised us as we expected lower year-on-year growth . The rise is probably due to continued strong investment supported by the government stimulus package and rising inventories, Simon Kitchen, senior economist at Egypt-based regional investment bank EFG-Hermes, told Daily News Egypt.
Last month, government officials predicted Egypt’s economy to grow a total of 4 percent this fiscal year, which ends June 30.
The third quarter of fiscal year 2008/09 ended March 31.
The government now forecasts growth of between 4 percent and 4.5 percent in the fiscal year through June, Bloomberg quoted Cabinet spokesman Magdy Rady as saying.
“We are pleasantly surprised by this quarterly growth rate as we had expected more subdued growth, Reham ElDesoki, senior economist at investment bank Beltone Financial, said in a statement.
According to the cabinet statement, Bloomberg reported, construction expanded 16 percent in the first quarter from the year earlier, while the telecommunications industry grew 14 percent.
I see this as an optimistic sign that things are bouncing back somewhat from the effects of the financial crisis. It seems that certain sectors are recovering and that trade is picking back up, and this is reflected in more positive growth numbers, Magdy Sobhy, an economist at Al-Ahram Center for Strategic Studies, said.
While revenue from the Suez Canal and tourism, top revenue earners for the Arab world’s most populous country, declined in the third quarter, the economic crisis has not had as dire an effect on consumer spending.