A think tank's survey of the economic climate clouds out the brighter official view. Mona El-Fiqi reports The nation's largest firms were less optimistic about the economy in the first half of 2006, according to the most recent Business Barometer survey conducted by the Egyptian Centre for Economic Studies (ECES). The bi- annual exercise canvasses the perspectives of some 320 large manufacturing, construction and tourism companies on their own activities as well as the overall performance of the economy. With increased concerns about the fiscal deficit and rising domestic public debt, as well as issues like poverty and unemployment, most companies said the first half of 2006 did not fare well compared to the six months that preceded it. This was despite Planning and Local Development Ministry figures indicating that the real GDP growth rate in the third quarter of 2005/2006, estimated at 5.9 per cent, was higher than the growth rate for the corresponding quarter in 2004/ 2005 (5.1 per cent) and the first half of 2005/ 2006 (5.7 per cent). According to the ECES Business Barometer, however, "the negative perception of economic growth in the past six months runs counter to official figures." Even positive developments like the stepped-up pace of privatisation, the survey suggested, may have been misperceived without an appropriate communications strategy adequately informing the public about the process. Other issues negatively affecting growth rate perceptions included recent terrorist bombings and other factors that have affected the tourism sector. Companies did report, however, more positively on their own production levels. According to the Barometer, a majority of firms reported stable or higher investment levels, and all the companies plan to increase or maintain their levels of investment during the next six months. The majority of respondents also claimed higher or stable production during the first half of 2006. The most favourable views came from the construction sector. Within the manufacturing sector, firms involved in mineral products, paper printing and rubber industries reported the most favourable results. As for employment, relatively more respondents reported stable or higher figures. A majority of companies also enjoyed higher or stable domestic and international sales during the first half of 2006. The main exception was in the tourism sector, where sales were lower than in the previous survey. Transportation equipment, rubber, and mineral products saw the most favourable domestic manufacturing sales, whereas ready- made garments, fertilisers and glass industries reported the most favourable export views. While most firms anticipate higher levels of production; again, the survey notes that "expectations were... slightly lower in the case of tourism." Expectations on domestic sales, meanwhile, are up. International sales expectations, on the other hand, are slightly less positive. Boosting expectations, the survey suggested, requires improving the macro-economic environment by pursuing more rigorous economic reforms. "More attention should be paid to the quality of growth, especially distribution and governance, in order to make the impact of growth widely felt by the population."
