CAIRO: The Seventh Business Roundtable with the Egyptian government opens in Cairo today, with a high profile list of attendees expected to probe the prognosis of Egypt’s growth for 2010-2011, the effects of the slow global recovery on the MENA region and competitiveness in attracting foreign investments.
The event organized by the Economist Group will be attended by ministers, economic experts and members of the business community to discuss the country’s post-crisis economic development.
In 2009 Egypt’s GDP grew by 4.7 percent, a significant drop from 7 percent in the preceding years. As domestic demand slowed down, inflation decreased to 10 percent in mid-2009, half of what it was in 2008. Although optimistic forecasts were announced throughout the second half of 2009, Egypt suffered a decline in Suez Canal revenues, stock market activities, FDI and two of its major industries: tourism and construction.
During last year’s roundtable, Prime Minister Ahmed Nazif introduced the government’s plan to invest in infrastructure projects to create jobs and to catch up with the economic development achieved until now. To this end, the government announced a LE 15 billion stimulus package to be spent on roads, sewage and water treatment projects, some of which were planned as Public Private Partnerships.
Later the same year another stimulus package of LE 5.5-6 billion was launched to complement investment project funding and complete the government’s rebate on capital goods compensating for lowering tariffs in the past few years.
At this year’s conference the prime minister is expected to present a third fiscal stimulus and its likely impact on the Egyptian economy. He is also expected to discuss the government’s long-term growth strategy and new economic reforms.
“Given that investment growth was very disappointing, the stimulus is filling the gap, said Simon Kitchen, an economist at EFG-Hermes. “It is difficult to say whether it supported growth because everything is changing at the same time, he added.
Kitchen, along with 14 other economists, participated in a Reuters’ poll in January which predicted Egypt’s growth to be 4.8 percent and 5.5 percent in fiscal years 2009-2010 and 2010-2011 respectively.
“We have factored in the third stimulus in these numbers, but they are not conditional on any changes in tax policies or cuts in subsidies, said Kitchen. He expects, however, that the government will abstain from such reforms, given the state of the economy and the current low inflation rates.
In addition to Nazif, Finance Minister Yousef Boutros-Ghali and Investment Minister Mahmoud Mohieldin are also attending the roundtable. On the business side, conference speakers will be members of the senior management of Google Egypt, Siemens Egypt, RWE Dea North Africa, Proctor&Gamble Near East, Orascom Construction Industries and El Sewedy Cables. The delegates will also be joined by two representatives of the Economist: Delia Meth-Cohn, Editorial Director CEMEA, the Economist Group, and David Butter, Regional Director of the Economist Intelligence Unit for MENA.
