CAIRO - The year 2010 has been uneventful for Egypt economically speaking, with no major changes. The Egyptian economy has grown in 2010 by an average of 5 per cent, while the country's gross domestic product (GDP) grew by 5.1 per cent in fiscal year (FY) 2009/2010, according to the Ministry of Finance. In 2009, the economy of this North African country slowed to 4.7 per cent. Egypt's economic growth is expected to reach pre-recession rates in 2011, analysts say. Until the global downturn, which swept the world in 2008, the country's economy grew by an average of seven per cent in 2007.
CBE keeping rates unchanged
The Central Bank of Egypt (CBE) maintained key interest rates unchanged, in a bid to boost investment and push the economic wheel ahead. The overnight deposit rate stands at 8.25 per cent, while the lending rate is 9.75 per cent. The rates have been in effect since September 22, 2009.
Inflation – a real challenge Inflation in the most populous Arab country of 80 million is seen as the most serious challenge facing the Government. Inflation may pick up in 2011, as world prices of many commodities are seen to rise due to escalating demand, one analyst told the Egyptian Mail. "Higher global demand in 2011 is expected to drive prices up. Given that Egypt is import-dependent, inflationary pressures will persist," added Samir Ezzat, a macroeconomic analyst at the Cairo-based Economic Research Centre. Inflation averaged 10.5 per cent over the past months, according to the State-run Central Agency fort Public Mobilisation and Statistics (CAPMAS). "Inflation for the whole year may stand at around 10.5-11 per cent," Ezzat added. Annual inflation stood at 21.1 and 16.2 per cent in 2008 and 2009 respectively, according to CAPMAS. Inflation reached a record high of 23.6 per cent peak in August 2008. Pound losing ground The Egyptian pound has lost much of its value versus the US dollar this year, falling to a three-year low in August and a four-year low a month later. Despite falling against other currencies globally, the greenback has been on the rise due to increasing demand in the local market. The dollar averaged LE5.78. "The dollar may rise more in 2011 to around LE5.9," Ezzat predicts. Summer power cuts Egyptians felt the pinch of power cuts during the summer and autumn of 2010. The Ministry of Electricity blamed higher-than-expected overloads on the torrid weather in June and July. Temperatures hit 47 Centigrade on June 21, causing a power overload of 22,700 megawatts per hour. In June, Minister of Electricity Hassan Younes said that consumption jumped by 13 per cent in 2010, and plans were underway to meet growing demand. Blackouts were nothing unusual during the summer. Younes said electricity output will be increased by 17,000 megawatts through expansions costing LE120 billion ($20.7 billion), by 2017. Bourse gets new chief In July, Khaled Serry Siam was named as the new chief of the Egyptian Exchange, replacing Maged Shawqi, who had been in office since 2005. Shawqi had been under fire in the local media, blaming him for the heavy losses that have hit small retailers over the past two years.Orascom Telecom in the limelight Orascom Telecom and its head Naguib Sawiris have made news headlines throughout 2010. After a legal victory earlier in the year, Orascom and France Telecom sorted out their dispute over the control of Mobinil, the biggest mobile operator in Egypt by subscribers. The two firms ended a three-year spat that caused much brouhaha among shareholders, legal consultants, officials, media organs and investors. Orascom continues to be in the limelight, as its spat with the Algerian Government over Djezzy has yet to be resolved. Orascom and South Africa's MTN failed to merge in May as Djezzy, the company's single biggest revenue earner, stumbled over negotiations. Algeria wants to nationalise Djezzy and buy Sawiris out. The spat over the Algerian unit is jeopardising a $6.6 billion deal to sell a majority stake in Orascom and other assets to Russian operator Vimpelcom. In December, the Algerian authorities reassessed taxes on Djezzy at $230 million for 2008 and 2009. Orascom vowed to take legal steps to challenge the "completely unfounded" reassessment.Amer launches IPO,becomes listed. In November, Egyptian real estate developer Amer Group launched an initial public offering (IPO). The IPO was oversubscribed 5.8 times. Amer received offers for 478.9 million shares, compared to the 82.1 million on offer. Trading on the company's shares had started by the end of November. Amer's IPO was the only offering in two years after Juhayna's IPO in 2008. IPOs are an effective tool to pump liquidity into stock markets, analysts say. Wheat bill soaring Russia's ban on wheat exports sent world prices soaring, putting Egypt, the world's biggest wheat importer, in a very tight corner. Wheat tops Egypt's imports with an average of seven million tonnes annually, needed to meet growing demand, according to official data. Egypt has earmarked LE7.6 billion ($1.3 billion) to import 5.8 million tonnes of wheat in FY 2010/2011, according to the Ministry of Finance. Sugar shooting up Against the backdrop of a supply gap and spiralling world prices, sugar has shot up to LE8 ($1.40) per kilogramme from LE4 in the local market. Bad weather in India, the world's second sugar exporter, and a slowdown of exports from Brazil, the world's top exporter, have lifted the price of the sweetener all over the globe.
Yarn crisis hits market
Egyptian textile producers felt the pinch of a supply shortage of yarn throughout the year. In October, producers warned that they might have to shut down their businesses due to the skyrocketing cost of yarn. Yarn prices have doubled in the local market over the year, jeopardising a labour-intensive industry that employs around 1 million, according to official figures. Yarn prices have doubled from LE13,000 ($2,290) per tonne to LE25,000, forcing factories to cut down production.
Omar Effendi in the doldrums Omar Effendi, Egypt's iconic department store, was at the centre of attention in October, when Arabiyya Lel-Estithmaraat agreed "in principle" to buy an 85 per cent stake in the chain for LE320 million ($55.4 million). The Saudi-based Anwal group purchased 85 per cent of the mega store from the Government in 2006. In December, Arabiyya said it had scrapped a plan to take over the department store as due diligence proved the deal unworthy.
