Consumer confidence in Egypt has been on the rise since May, according to Bayt.com and YouGov Siraj’s recently released Consumer Confidence Index Survey.
Dropping and wavering throughout 2008 and the beginning of 2009, the Consumer Confidence Index (CCI) finally established stable growth. This change reflects Egyptians’ growing optimism about their financial future.
The pattern of growth of the CCI over the second half of 2009 reflects to a great extent the alleviation of the population’s fears. As the effect of the world financial crisis began to be felt by the end of 2008, many feared that in 2009 the Egyptian economy would suffer even more. As the year progressed, however, the economic slowdown turned out to be less severe than expected.
Key industries, like tourism, registered little growth, but at least no losses from the 2008 levels. Towards mid-2009 the government and many businesses started confidently announcing that 2009 will be better than expected.
Probably influenced by this outspoken optimism, by the end of the year, 33 percent of the Egyptian respondents in the survey evaluated their financial situation in 2009 as better than in 2008; 32 percent saw no change.
At the same time, 48 percent said that they expected their finances to improve in 2010; 11 percent did not foresee any change. About one-third of the participants in the survey expected the economy to improve in 2010; 21 percent thought that it will stay the same.
“We cannot generalize [about consumer confidence]. The general public is one thing and the private sector another, says Samir Radwan, managing director of the Economic Research Forum, commenting on the survey.
He says that the fact that inflation was under control in the past year has helped the financial stability of the general population; yet the bottom 40 percent, he says, are still complaining of their low income. The CCI survey shows that 67 percnet of Egyptians think that their salaries have not kept pace with the cost of living.
“Confidence is high in the business sector, Radwan notes, citing the Business Barometer analysis of the Egyptian Center for Economic Studies. “The expectations are good for the next six months, but the business sector is complaining about issues of licensing, the bankruptcy law, and market exits.
Not all indicators registered growth since May 2009. The Propensity to Consume/Spend Index wavered in 2009 and in December it slightly dropped from its August level (from 88.9 to 88.0). The instability of this index shows that despite the general optimism, Egyptian consumers still approach the market with caution.
Forty percent of Egyptians surveyed think that it is a bad time to buy consumer durable goods like electronics and appliances; 20 percent said it is a good time.
Meanwhile, 61 percent of the respondents say that they do not consider at all buying property within the next 12 months; only 19 percent plan to buy.
The real estate industry does not seem to respond to these figures. “It’s a funny market, says Radwan, “There were no sales or almost no sales in 2009, but the prices remained fixed.
Radwan thinks that the real estate market might pick up, as the mortgage industry develops. In 2009, Egypt received a $300 million loan to develop its Affordable Mortgage Finance Program, which, along with new entries in the mortgage market, is expected to alleviate the high mortgage rates.
On the spectrum of confidence in the Middle East, Egypt falls midway between the very optimistic, like Lebanon, and the very pessimistic, like UAE. The crisis in Dubai in November 2009 seems to have upset the hopes of the Emirates for a quick recovery from the financial crisis.
On the other hand, years of political instability and a recent war seem to have given the Lebanese a better appreciation of their growing economy. Of the surveyed Emiratees, 14 percent said that the business conditions in their country are good compared to 30 percent of the surveyed Lebanese.
“The figures are interesting, because unlike many previous patterns where, for example, the countries of North Africa would each record a dip while the Gulf countries each showed an improvement, the latest data shows that there is little correlation between the countries of particular areas of the Middle East, demonstrating clearly how each country’s economy is completely independent – regardless of geographic proximity, notes Amer Zureikat, Bayt.com’s Regional Manager.
In the CCI survey of December, Gulf countries had lower consumer confidence index levels than Northern African countries. The exceptions were Bahrain and Morocco; the former registered growth in all indicators, while the latter saw a drop.
