Egypt's economic growth is seen edging up over the next two years as the most populous Arab country continues to outperform many other regional states, a Reuters poll showed late Wednesday. A survey of 11 economists predicted gross domestic product (GDP) in the North African country would grow 5.2 per cent in the fiscal year ending in June 2011, based on the median figure, and 9 economists forecast it would grow 5.3 per cent the year after. That is faster than the predicted rates for all the Gulf Arab states except Qatar, but still below the annual rates of more than 7 per cent that Egypt had posted before the outbreak of the global financial crisis. "For the economy to really accelerate beyond the 5.8 to 6 per cent level, we really need to see a stronger economy in Europe, which most probably will not happen," Mohamed Abu Basha, an analyst at investment bank EFG-Hermes, said. Economists have said 6 per cent plus is needed to create enough jobs for its growing workforce and to dent poverty. Egypt's economy has benefitted from more than five years of tariff cuts, the sale of state companies, the liberalisation of investment regulations and other reforms. The financial crisis nevertheless hit Suez Canal revenue and foreign investment. Growth fell to 4.7 per cent last year, and a previous poll forecast the economy would grow at a similar rate in the year ending this month. Economic Development Minister Osman Mohamed Osman said in May that GDP could grow as much as 5.3 per cent this year and 6 per cent in the year ending June 2011. Tourism, accounting for about 11 per cent of GDP, has proven fairly resilient, with revenue down just 2.1 per cent in 2009. Egypt has also approved about 34 billion Egyptian pounds of stimulus spending in three stages since the global economic crisis hit, targeted mainly at infrastructure spending. "The fiscal stimulus packages had an effect, especially the first one worth 15 billion Egyptian pounds," said Reham ElDesoki, senior economist at investment bank Beltone Financial. The poll also predicted inflation would reach 10.9 per cent next fiscal year and fall to 8.5 per cent the year after that. Accordingly, analysts expected the central bank to cut the overnight lending rate to 9 per cent next fiscal year and snip it to 8.5 per cent the year after. The rate is now 9.75 per cent. The Egyptian pound is seen strengthening to 5.50 pounds to the US dollar next year, comparted to 5.68 pounds to the dollar now. It is seen weakening again to 5.58 pounds the year after that, the poll showed.
