CAIRO: In what amounts to the first hint of how Egypt’s economy performed in the first quarter of fiscal year 2009/10, reports have circulated that real GDP growth is expected to have been 4.9 percent between July and September 2009.
This number first surfaced after Bloomberg quoted the Minister of Economic Development discussing the new numbers.
A 4.9 percent growth is a positive step for the economy, which grew only 4.5 percent between April and June of this year. And increase in growth of nearly half a percent will add fuel to the argument that Egypt is in full rebound mode.
The economy grew by 4.7 percent in fiscal year 2008/09, which ended in June, after growth of 7.2 percent in fiscal year 2007/08.
The latest figures also show the beginning of a return to the economic performance Egypt experienced as the global economic collapse began. Economic growth was 5.8 percent in the first quarter a year ago. That quarter showed the beginning of the Wall Street meltdown, capped by the collapse of Lehman Brothers.
“The first quarter 4.9 percent growth in GDP is a strong outturn for the Egyptian economy and continues the trend of stronger economic growth since the trough in quarter two of 2008/09, where GDP growth was 4.1 percent, Tudor Allin-Khan, chief economist and strategist for HC Securities, wrote in an email to Daily News Egypt.
“The increase in growth has been stimulated by government spending, most particularly in the construction sector, which expanded 13.8 percent, he added.
Allin-Khan tempered his optimism, though, noting that the construction sector only makes up a small percentage of the economy.
The communication and transportation sectors also led the way in facilitating the rebound in real GDP growth.
Tourism, a real cash cow for the government, only grew by 5.4 percent, a figure that will have to dramatically improve should Egypt hope to post more robust growth numbers going forward.
Sectors that are still negatively affected are Suez Canal revenues and tourism, while sectors that are growing include construction and telecoms. These are growing in double digits, over 13 percent, Cabinet spokesman Magdi Rady told Reuters.
The government has taken a proactive stand to insure that economic growth gets back on track. After years of reform, the economy had finally begun posting the sort of numbers that, if sustained, would mean a general economic improvement for ordinary Egyptians. The economic meltdown worldwide derailed that progress, but the government seems determined to correct course.
“The government is injecting LE 8 billion into the economy in fiscal year 2009/10, with a recent announcement by the government that it will inject another LE 10 billion in the current year, as well, to ensure the achievement of a growth rate ranging between 5 percent and 5.5 percent, wrote Beltone Financial in a note.
There is a certain urgency in the need to spur recovery in Egypt, because the job market stands to suffer significantly if higher GDP growth rates are not achieved.
“The Egyptian economy needs to attain an economic growth rate of 5 percent per annum to accommodate new entrants to the labor market. An economic growth rate below this mark will result in a rise in unemployment with the Egyptian economy, wrote Allin-Khan.
Allin-Khan noted that Egypt’s GDP growth remains among the strongest in the region. But given the unemployment situation, Egypt likely needs to remain a leader to keep its citizens employed.