ECONOMIC OVERVIEW
Broad-based institutional and structural reforms led to strong GDP performance, reaching 4.9% growth in FY08/09. Since FY04/05, Egypt's economy has leapfrogged on both its economic and fiscal management platforms. The country’s GDP has been stimulated by a diversified output strategy that has been reflected in the strong performances of the construction, real estate, communication and trade sectors.
Supply side: Communications was the key driving sector in FY08/09, recording 14.9% growth. The mobile segment drove up the sector’s growth through increased usage and subscribers, while fixed-line tariff rebalancing went into effect on July 1st, 2008. Communications and real estate were the only sectors that saw growth in FY08/09. Fueled by the Government of Egypt (GoE)'s focus on infrastructure projects and aided by the drop in steel prices, construction has maintained a leading role since mid-FY08/09, with growth of 16.1% and 14.4% in 3Q and 4Q, respectively. Initial estimates show that though construction activity continued to lead growth in 1Q09/10, its pace slowed compared to last quarter - as CICR expected. Construction grew by 13.8% in 3Q09 (vs. 14.4% a quarter earlier). Construction exhibited reduced performance primarily due to the holy month of Ramadan and the El-Fitr Feast, a slowdown in line with historical trends.
Demand Side: The GoE's efforts to support the economy manifested themselves primarily through increased spending during FY08/09. GoE spending recorded a growth of 8.4% in FY08/09, up from 2.1% in FY07/08. On the other hand, private consumption recorded growth of only 4.5% in FY08/09, down from 7.6% in FY07/08. As domestic investments represent the bulk of total implemented investments in Egypt, the GoE directed its efforts toward supporting the investment climate with a special focus on infrastructure projects. Unfortunately, investment saw a 10.7% drop in FY08/09 (compared to a growth of 15.5% in FY07/08) as a result of the global economic slowdown. Still, the beginning of 2009 shows growing confidence in Egypt’s potential, as evidenced by the new projects trumpeted in the headlines of various sectors.
Indicators
| FY03/04 | FY04/05 | FY05/06 | FY06/07 | FY07/08 | FY08/09 | |
| Real GDP Growth (%) | 4.1% | 4.5% | 6.8% | 7.1% | 7.2% | 4.9% |
| Inflation (CPI, %) | 4.2% | 10.9% | 11.7% | 16.5% | ||
| Trade Balance (US$ mil) | (7,523) | (10,359) | (11,986) | (16,291) | (23,415) | (25,173) |
| ITA (mil) | 7.5 | 8.7 | 8.7 | 9.8 | 12.29 | 12.26 |
GDP breakdown by sector
GDP growth by sector
GDP growth breakdown
