CAIRO: "Our region is proving resilient to uncertainty and volatility in the credit and financial markets of the US and Europe as a result of the US sub-prime and mortgage market crisis, said Nasser Saidi, chief economist of the Dubai International Financial Center (DIFC). As the US economy teeters near a recession triggered by the housing slump, credit crunch, as well as higher food and fuel costs, Saidi thinks Egypt is immune to any possible downturn. "The [world] is living in a period of uncertainty in 2008, said Saidi, "The question in 2008 is whether or not the sub-prime crisis in the US is going to transmit itself to the region . or whether or not we are decoupled from what is going on in the US and Europe. Saidi believes that the second scenario is more likely. "The region doubled growth rates in the last years . from 3.8 percent in 1998-2002 to 6.2 percent in 2003-07. He projects growth rates for 2008 at similar levels, though not as exuberant as in 2007. Egypt's GDP, he said, is expected to grow strongly at 7.3 to 7.5 percent this year. "Growth rates are likely to remain sustained and positive in the years to come . as economic reforms and liberalization continue. Similarly, Finance Minister Youssef Boutros-Ghali said in late January that Egypt is on course to beat last year s 7.1 percent economic growth despite indications of an international slowdown. Saidi cited cuts in income tax rates and customs duties, increase in foreign direct investments, moderate reduction in fuel subsidies, and robust performance in real estate and tourism as Egypt's main agents of growth. "[Amid such] strong economic and financial reforms, more investment in the region is happening from countries in the region itself, he said. In Egypt, around 70 percent of foreign direct investments comes from emerging markets. "Emerging markets are investing into themselves; and as this happens, they create [pacts] and free trade agreements. Despite global market turmoil, Saidi sees the Egyptian stock exchange an evergreen success story. "Despite the correction, Egypt's stock market is picking up [again]. It has done extremely well; and if you have invested in the Egyptian market, you have done much better than investing in the New York Stock Exchange and in other emerging markets. Financial markets in the region, including Egypt, attracted inflows from institutional investors into the region to benefit from risk diversification based on the low correlation with the US and European indices. The Egyptian stock market, in particular, has been one of the best performers in the region (the second best market in the Arab World in 2007 after the Omani market), with an increase of 50 percent last year. "Egypt's stock market has seen spectacular performance, but volatility [remains a concern], Saidi pointed out. "Volatility is something that investors don't like . and it [adversely] affects investors' perception on the market.
