Egypt’s central bank (CBE) released its annual report for the fiscal year 1999/2000. According to the report, nominal GDP witnessed a 6.4 percent growth rate, up from 6 percent in FY99. Real GDP (Gross Domestic Product) fared slightly better growing at 6.5 percent compared to 6.1 percent in 1999.
The relatively robust growth in real GDP is a natural outcome of a year with record low inflation. In 2000, the CPI (Consumer Price Index) annual index grew at a modest 2.5 percent compared to 2.9 percent in 1999.
A sectorial segmentation of GDP reveals the following: about half of Egypt’s GDP is generated from the commodity sector, followed by the production service sector with a 33 percent contribution to GDP, and the social services sector, which accounts for the 18 percent balance.
A closer look at FY00 GDP components shows that while no significant change has occurred in the main constituents, the oil sector experienced significant growth. Oil and petrochemicals grew at 0.4 percent in FY00, up from –5.2 percent in FY99. The report attributes this recovery to new discoveries of natural gas coupled with the rebounding of oil prices in 2000.
In 2000, total domestic saving recorded at 55.7 billion Egyptian pounds ($14.43 billion), up 13.3 percent from the LE49.15 billion figure of 1999, bringing the saving rate to 18.3 percent up from 17.1 percent. Furthermore, the investment rate stood at 23.3 percent in FY00, up from 22.7 percent in FY99.
The money supply (M1) grew at a mere 1.9 percent, down from an 11.6 percent CAGR for the period 95-99. Furthermore, the broader measure M2, increased by a modest 8.8 percent down from a 95-99 CAGR of 11.3 percent.
These results are attributable primarily to the credit crunch that Egypt faced in 1999 and 2000. As of June 2000, total assets in the banking sector were LE282.338 billion, up 8.7 percent from June 1999.
Banks bore the brunt of the credit crunch and reacted by curbing loans. Accordingly, total lending and discounts grew at a modest 11 percent down from 18 percent in FY99. Conversely, deposits’ growth remained stable at 9.7 percent, bringing the loans/deposits ratio to 87 percent in FY00.
Prime Securities S.A.E.
© 2001 Mena Report (www.menareport.com)
