CAIRO - Egypt's revenues from the Suez Canal, tourism and its expatriates working abroad have helped the country to survive the global recession, the World Bank has said in a report. The North African country's economy grew by 5.1 per cent of gross domestic product (GDP) in 2010 up from 4.7 per cent of GDP in 2009, the report said. The lender attributed Egypt's economic growth in 2010 to its three major foreign currency earners: the Suez Canal, toursim and Egyptian expatriates' remittances. It also said foreign direct investment (FDI) helped ease the gap in the balance of trade. The country's manufacturing sector expanded by 8.5 per cent in the first eight months of 2010, said the report. Egypt is on track to reach an economic growth of eight per cent of GDP annually, Osama Saleh, the head of the General Authority for Investment and Free Zones (GAFI), was quoted by local media on Thrusday. Saleh said GAFI would carry out directives of President Hosni Mubarak to speed up growth rates to an average of eight per cent, adding that GAFI has streamlined a plan to attract more FDI inflows. The World Bank forecast around 4.3 per cent GDP growth for the Middle East and North Africa (MENA) region in 2011 as a whole, with Egypt leading at 5.5 per cent. Egypt's strong external indicators survived the global recession essentially unscathed. The current account deficit remains small and covered by FDI, reserves are rising again, Fitch ratings agency said in a report. The economy demonstrated increased resilience during the global recession, testament to the increasing diversity of growth drivers, encouraged by reforms since 2004. But inflation is currently the main challenge for macro management, according to Fitch. Headline inflation has fallen over the past year but rose slightly to 10.3 per cent in December, while core inflation, excluding the most volatile prices, jumped to 9.3 per cent. The World Bank said economic growth in the world's wealthier nations was still too slow to create enough jobs for the tens of millions who lost theirs during the global recession, according to Reuters. In a report detailing its outlook for 2011, the multilateral lender forecast the global economy would expand 3.3 per cent this year, softer than the 3.9 per cent expansion seen during 2010. Growth in the developing world will sharply outstrip growth in mature economies. The World Bank forecast growth in emerging economies of six per cent in 2011, weaker than last year's seven per cent rate. Rich countries, in contrast, will grow only 2.4 per cent, down from 2.8 per cent for 2010. “The recovery in many high-income countries has not been strong enough to make major inroads into high unemployment in spare capacity,” the report said. The United States, the world's largest economy, is a case in point. The economy exited its worst recession in generations in the summer of 2009. But at 2.6 per cent on latest count, growth has been too soft to put a meaningful dent in a stubbornly high jobless rate — now at 9.4 per cent. The World Bank predicts the US economy will grow 2.8 per cent in 2011, largely in line with a median forecast of 2.7 per cent in a Reuters poll of private sector economists. In Europe, recovery has been hampered by persistent worries about highlyindebted countries like Greece and Portugal, which have kept borrowing costs high and led to severe market disruptions. Eurozone growth is expected to slow to 1.4 per cent this year from 1.7 per cent in 2010, the World Bank said. Indeed, thereport cited the continent's ongoing debt debacle as a key risk to the global recovery. Given a backdrop of uncertainty, monetary authorities on both sides of the Atlantic have adopted a policy of extremely low interest rates, which the World Bank blamed for rising currency exchange rates in parts of the developing world. “Capital inflows into some middleincome countries have placed undue and potentially damaging upward pressure on currencies,” the World Bank said. The US Federal Reserve, in particular, has come under intense criticism from officials in emerging economies for its policy of purchasing government bonds to keep long-term rates down.
