Businesses are optimistic about where the economy is heading. Mona El-Fiqi reviews a recent survey Business Barometer is a biannual survey conducted by the Egyptian Centre for Economic Studies (ECES), and reflects the views of 474 large firms on the overall performance of the economy as well as their own activities in the previous six months. The survey also includes the expectations of these businesses in the coming six months. The most recent study looked at the first six months of 2007, and focussed on businesses from various sectors such as manufacturing, construction, tourism, transportation and communications. Results indicated that the number of firms with positive perceptions about economic growth over the past six months more than doubled, compared to the previous survey. This positive outlook reflects favourable economy and policy developments in the past few years. But the Business Barometer noted that these positive views may not hold for long, since firms expressed uncertainty about the sustainability of economic growth in the short run. To reinforce confidence in the economy, the report suggested that more rigorous and comprehensive reform measures be taken, particularly at the institutional and regulatory levels. "The majority of firms have voiced concern about the government's regulations, legal procedures and insufficient skilled labour," stated the report. At the sector level, the study found out that the real growth rate of the construction sector reached 16 per cent during the first three quarters of 2006/2007, compared to 13 per cent during the corresponding quarters in 2005/2006. The communication sector also witnessed a real growth rate of 14 per cent, which is four per cent higher than the same period in the previous fiscal year. Moreover, the Suez Canal and tourism industry achieved remarkable growth, recording 16 and 13 per cent, respectively, during July-September 2006/2007. Manufacturing, financial intermediation and other sectors witnessed a slight increase in growth, while the mining sector declined significantly during the same period. As for production, the majority of businesses reported higher or stable production during the first six months of 2007. Meanwhile, expectations for the next six months are also positive, with 79 per cent and 15 per cent of firms expecting higher or similar levels of production, respectively. The ECES Business Barometer added that the majority of business firms reported higher or stable international sales during the last six months, more so in comparison with the previous survey. International sales mainly targeted African, Arab, EU and Asian markets, while a lower share was exported to the US. These results are largely in line with the Central Agency for Public Mobilisation and Statistics (CAPMAS) figures on exports, which revealed that between January and May, 2007, exports to EU and Asian countries represented 26.4 and 29.3 per cent of total exports, respectively, while exports to the US were only 9.4 per cent. According to the survey, businesses did not feel output and intermediate input prices changed significantly compared to the previous survey. The majority of firms reported stable or higher output prices, most notably in the construction, tourism and manufacturing industries. The vast majority of firms reported higher or stable prices for intermediate inputs. "Only firms in the manufacturing and transportation sectors reported lower intermediate input costs," stated the Business Barometer. With respect to employment, companies reported stable (58 per cent) or higher (27 per cent) levels during the first half of 2007. According to the survey, the majority of these firms hired more blue-collar (30 per cent) than white-collar workers (24 per cent), and more temporary (54 per cent) than permanent workers (49 per cent). For the next six months, 57 per cent of respondents project to maintain their level of employment, while 33 per cent intend on increasing it.
