BUSINESSES IN EGYPT OPTIMISTIC DESPITE POLITICAL TURMOIL Cairo - 01/12/2013 (Cairo Press Review) The British newspaper Financial Times uncovered that signs of an improvement in business sentiment are emerging in Egypt despite continuing political instability as the military-backed authorities continue their crackdown on Islamists after the ouster of President Mohamed Morsi in July. Figures published earlier this month by HSBC tracking activity in the non-oil private sector showed a sharp increase in the purchasing managers index, PMI, from 44.7 percent in September to 49.5 percent in October, its highest level in eleven months. Fifty marks the separation between contraction and expansion. Billions of dollars in cash injections from Gulf countries, two stimulus packages announced by the government and hopes of a recovery in tourism have helped generate optimism, Financial Times reported. However, analysts caution that the return of activity has not been accompanied by any significant new investment. Financial Times quoted Simon Kitchen, strategist EFG-Hermes, the Cairo-based regional investment bank, as saying, “I think sentiment for local businesses has improved a lot but it is difficult to separate their relief at Morsi’s departure from cold business decisions.” “They are relieved not just because Morsi was not doing a good job managing the economy, but they felt that their businesses were under threat from his Muslim Brotherhood group trying to nurture an alternative economic elite.” He added. He said that foreign investors remained wary of instability in Egypt. In addition, the deferral of big economic reforms such as the reduction of costly fuel subsidies continued to hamper a strong return of interest in the country. Foreign investors are adopting a “wait and see attitude,” according to Kitchen, though some international companies are now happier to send staff to Egypt after the US allowed the families of embassy employees to return having ordered their departure in the summer. Ihab Derias, chairman of the Egyptian Furniture Export Council, said that the expectations of a recovery in tourism have injected new momentum in hotel projects that had faltered over the past two years. Many European countries have now lifted or eased travel bans on Egypt, and officials say they expect tourist numbers to start climbing next year.
Posted on: Sun, 01 Dec 2013 13:16:58 +0000
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