OK for now STANDARD and Poor's (S&P) kept its sovereign rating for the Egyptian economy stable. S&P, a leading provider of financial market intelligence headquartered in New York, forecast a sharp fall in Egypt's growth to 3.6 per cent in fiscal year 2008/09 and an even lower 3.5 per cent in fiscal year 2009/10. According to S&P, "the sharp deterioration in external demand now poses the principal threat to Egypt's creditworthiness." Further, it expected the government deficit to widen to 9.5 per cent in 2008/09 and Egypt's external position to weaken as a result of the slower growth. However, it also added that Egypt is in a position that would enable it to weather external shocks, which will enable the government to "meet the challenge of weakening external demand without veering from its commitment to economic reform or a substantial deterioration of public finances." S&P also said that the outlook reflects "the improving credibility of the central bank and declining inflation, which together should allow the authorities to dampen the impact of the external shock through employing greater exchange rate flexibility." Optimistic against all odds CONSUMER confidence in Egypt has increased and Egyptians are slightly optimistic for the first half of 2009 despite global and regional economic challenges. This is according to the latest MasterCard Worldwide Index of Consumer Confidence released last week. The index has shown that consumer confidence is higher than the last reporting period of the second half of 2008, with overall results showing that consumers in Egypt are more optimistic about regular income, employment, the economy, and quality of life for the six months ahead. The index is based on a survey which measures consumer confidence in the market for the next six months. Alongside this index, another similar tool for consumer purchasing priorities was also launched. Released twice a year the new index will provide insight into consumers' savings and expenditure behaviour and their discretionary spending priorities. Both indexes are based on consumer surveys conducted across six markets in the Middle East. In Egypt 55.6 per cent of consumers are slightly optimistic about the next six months, up from 32.3 per cent during the past six months. Consumer confidence in the economy increased to 49.5 per cent from 29.9 per cent, while confidence in the Stock Market increased to 50.2 per cent from 33.0 per cent. In the area of purchasing priorities, "children's education, dining and entertainment, and spending on self education emerged as some of the most important priorities for consumers," said Shaun Rashid, area head for Egypt the Levant, MasterCard Worldwide. Last-ditch lending THE NATIONAL Bank of Egypt (NBE) announced this week that it is in top shape. The bank which serves 4.5 million clients through 14,000 employees has made revenues worth LE11.1 billion. Speaking at a press conference earlier this week NBE Chairman Tareq Amer said the bank has closed a major gap in its reserve allocations, boosting reserves allocations by 185 per cent to reach LE7.9 billion. This move, he said, was essential to get the books back in order. Amer said the NBE intends to put its full weight behind projects that will create job opportunities and entice growth, such as infrastructure projects, health, education and agriculture. Further he stressed that among the bank's priorities are small and medium enterprises (SMEs), for which it has created a special unit, and in which it will invest some LE1.5 billion. Amer said the NBE will not merely be a lender to SME projects but a shareholder. Furthermore, the bank intends to allocate some LE10 billion to long-term mortgage finance and another LE5 billion towards car financing. The chairman also said that the bank is working on improving its customer base through improved services and infrastructure. He pointed out that the bank's shares have fallen from 27.3 per cent in June 2006 to 23.2 per cent in June 2008. With improved services it has started picking up again to reach 26.6 per cent in December 2008. Partnering with tigers THE PRIVATE sector in Egypt has an exceptional opportunity to open up to Asian markets through the second Asia/Middle East Dialogue (AMED), due to be held in Cairo from 9 to 11 April. A gathering of 26 Asian countries and 24 Middle Eastern countries, represented by high level delegations, business associations and private sector enterprises will be present to nurture the mutual interest in building up more dynamic economic relations and expand investment opportunities between the two regions. "The event underlines a dialogue of a new nature between the Middle East and Asian countries of extremely significant economic weight such as Japan, China, Malaysia and others. The aim is to serve political, economic, social as well as cultural ends," said Raouf Saad, assistant to the Egyptian foreign minister at a press conference announcing the event. Saad added that the global financial meltdown gives this year's meeting great significance. Originally, AMED was advocated in 2005 by Goh Chok Tong, now senior minister in the Singapore Cabinet. The aim was to foster dialogue and mutual understanding and to strengthen cooperation in different fields between Asia and the Middle East. Last year, Egypt hosted AMED I. However, this year's event is believed to be the true take-off for the dialogue. The event is organised by the Egyptian Businessmen's Association (EBA) in close cooperation with the Egyptian Ministry of Foreign Affairs and the Ministry of Trade and Industry. "The event will provide the private sector in Egypt with a golden chance to meet with their Asian counterparts. A special focus will be given to presenting small and medium-sized enterprises in Egypt. Feeding industries can also benefit a lot from participation," said Sherif El-Gabali, board member of the EBA, who stressed that Asian markets know very little about the business environment in Egypt and the Middle East as a whole.
