The Egyptian economy has been showing signs of a slow, but painful recovery since a $12 billion loan from the World Bank, late last year, followed by a number of economic reforms, including the free float of the national currency. Tourism appears to be picking up and foreign investors are starting to buy Egyptian treasury bills once again.
One of Cairo’s major, five-star tourist hotels was bustling with visitors on a recent day, following months of slow performance.
Tourism accounts for nearly 12 percent of Egypt’s GDP and has always been a key barometer of the country’s economic health. Sporadic terror attacks, two airline crashes and the accidental bombing of a busload of tourists by army helicopters had put a damper on tourism for months.
Overall, Finance Minister Amr El-Garhy sounded optimistic during a recent press conference to discuss the country’s economic indicators for 2016.
He stressed that the government’s operating deficit in 2016 decreased slightly and looks to be headed lower for 2017.
“Deficits,” El-Garhy said, “put pressure on the state, adding to inflation and causing depreciation of the national currency.”
“By lowering deficits,” he adds, “Egypt will have less debt, decreasing the need for borrowing.”
El-Garhy said consumers may be feeling pinched by recent price increases, but would see an improvement in a year and an even greater improvement over the next three years.
A popular Egyptian TV program, however, reports less than favorable reaction in the street to rising prices and sporadic shortages of food staples. Shoppers at a suburban Cairo vegetable market expressed frustration.
An irate housewife says cooking oil and cooking gas have gone up in price, while a woman next to her says everything is becoming exponentially more expensive.
In southern Egypt, a disgruntled consumer set fire to a government supply depot last month, but most Egyptians have taken the situation in stride.
Egypt making progress
Egyptian President Abdel Fattah el Sisi, who has faced grumbling over recent price increases, drew applause as he addressed a crowd of young people, recently, arguing Egypt is making slow progress.
The president said development requires a collective consciousness and understanding of the threats facing the nation, in order to set things straight. He maintains that Egypt is making progress, even if people aren’t happy about everything.
Sisi added he is doing his best to help meet the aspirations of Egypt’s 90 million citizens, especially its young people.
“A young man, today,” the president insists, “will see major progress in the next 10 years.”
Investors show confidence
Foreign investors are expressing growing confidence in Egypt’s economy, as analyst Khaled Abou Haif told Egyptian TV. He said traders have been seeing very strong demand for (Egyptian) treasury bills, indicating confidence in the economy by foreign investors and helping meet the country’s foreign currency needs.
Egypt’s key stock market indices have also risen, despite the simultaneous increase in the value of the dollar, after the government allowed the Egyptian pound to float freely.
Other variables, like Suez Canal revenues, have some economists worried, given the conflict in Yemen, which overlooks the strategic Bab el Mandab strait, the Gulf of Aden and Red Sea waterways. Lower oil prices may also have caused a decrease in the number of ships transiting the canal, according to some observers.