A less than optimistic forecast for the Egyptian economy has just been released by the respected Egyptian Center for Economic Studies (ECES). Basing its prediction on a sharp decline in production by the manufacturing and construction sectors during the first half of the year 2000, ECES predicted a low level of growth for the immediate future.
According to ECES, of particular concern is a decrease in the performance of sectors whose condition has a longer-term effect on other branches of the economy. This is evidenced by a decrease in consumption of cement and industrial electricity, as well as a decline in imports for these sectors.
The slower level of economic growth, the study stated, was also indicated in a fall in the number of companies established during the past year. About 75 percent of the companies participating in the ECES study said that their production in the first half of 2000 was either the same or lower than in the second half of 1999.
Responsible for this phenomenon was slower sales in both the local and international markets, explained the ECES study. However, although many of the participants remained optimistic about sales in the domestic market during the second half of 2000, they were less confident when it came to exports.
One of the reasons for the general slowdown, the study said, is a general shortage of liquidity in the economy, which was aggravated by Cairo's attempts to maintain a stable exchange rate during a period when there was rush on foreign exchange.
However, of late, the ECES study reported, there have been signs that liquidity may improve. This is because of increased flexibility on the part of the government on the exchange rate and a general recovery of the tourism sector. — (Albawaba-MEBG)
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