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Egypt's Economy Boosted by Tourism

Tourism contributes to growth of Egypt's economy

Abdel Latif Wahba and Alaa Shahine  Feb 12, 2010

Egypt’s economy recorded its fastest growth in more than a year in the fourth quarter, boosted by tourism, construction and manufacturing, Economic Development Minister Osman Mohamed Osman said.

The economy of the most populous Arab country expanded 5.1 percent, Osman said in an interview today in Cairo, faster than his earlier forecast. Economic growth was 4.9 percent in the previous three months.

“We have turned a corner,” he said. “It’s like when you ride a car and turn from the second gear to the third and the fourth.”

The central bank reduced its benchmark interest rates six times in 2009 to support economic growth. The economy may expand more than 5 percent in the fiscal year through June, Osman said. Initial data indicated the economy grew 4.5 percent in the fourth quarter, Osman said in January.

The bank kept overnight interest rates on hold in its last three meetings, saying their current levels support the economy’s recovery and keep inflation within its “comfort zone” in the medium term. Annual growth slowed from the average of 7 percent in the three fiscal years that ended in June 2008.

Tourism expanded more than 13 percent and manufacturing grew 5.2 percent, Osman said. Construction expanded 11.5 percent, telecommunication 12.8 percent, energy and mining 5.6 percent and wholesale and retail 5 percent, the government said in a statement released to reporters.

Tourism Growth

“For tourism this is the first quarter to grow in almost a year,” said Mohamed Abu Basha, an economist at EFG-Hermes Holding SAE, Egypt’s biggest publicly traded investment bank. “It seems that it has recovered.”

Egypt, home to the pyramids of Giza, recorded a 2 percent decline in tourism revenue in 2009 to $10.76 billion and aims to increase its receipts to $11.5 billion this year, Tourism Minister Zoheir Garranah said this week.

Shares of Talaat Moustafa Group Holding, Egypt’s biggest publicly traded real estate developer, surged 125 percent in 2009. The company, which also owns several hotels, four of them operated by the Four Seasons Hotels Inc., has gained 7 percent this year.

“Construction has always been strong and it’s maintaining the strong levels,” Abu Basha said. Orascom Construction Industries, the country’s largest publicly traded builder, rose 78 percent in 2009.

The government plans to increase spending by 11.2 billion Egyptian pounds ($2 billion) to support the economy, with most of the money going into infrastructure projects.

Tourism contributes to growth of Egypt's economy
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Source: Bloomberg

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