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25 February 2024

Egypt sees 3-3.5% 2010-11 growth

Egypt banks opened on February 6 (Reuters)

By Reuters

Egypt's political issue will probably halve the country's economic growth in the fiscal year that ends in June, but the economy should rebound quickly after that, the central bank said on Friday.

The government had been projecting growth of up to 6.2 per cent, but a decline in tourism and industrial production since protests broke out on January 25 meant it would be far lower, Central Bank Deputy Governor Hisham Ramez said.

The unrest has caused tourists to flee and has led to strikes and disruption across the economy.  "The coming two quarters will see some slowdown till things gather momentum again. We'll see the growth for the fiscal year ending June 2011 -- we expect the growth to fall possibly as low as 3, 3.5 per cent," Ramez said on a conference call.

He said the central bank had expected $10-12 billion to leave the country in the first two to four days after banks opened from a week-long closure on February 6, but the feared outflow did not materialise.
"We can say it was 70 per cent of our worst-case scenario," Ramez said. "I think we'll see money coming back in the coming three to four months."

The greatest damage to the economy would be in tourism, he said. Industry would also be hurt, but could bounce back to normal within two or three months.
He said the unrest was unlikely to affect Suez Canal revenue, a major source of foreign currency, and that the change in government would lead to higher growth in the medium and long term.

"Lots of negative issues that used to hang on, like monopoly, corruption, it's over. So all this is positive for the economy," he said.
Banks, which have only been open for six working days since Jan. 27, would reopen as planned on Sunday, he added.