Egypt’s economy reached a year-on-year growth rate of 6.8 percent in the first quarter of the 2014/15 fiscal year, according to Minister of Planning Ashraf al-Araby.
Speaking at a Monday meeting of the Cabinet’s Economic Ministerial Committee, Araby also noted that July-September figures showed a growth rate of 1.1 percent when compared to the previous quarter.
Egypt is on track to reach an annual growth rate of 3.8 percent for the 2014/15 financial year, indicating that the country is on the path to economic recovery, Araby said. According to data from the Ministry of Finance, the country saw 2.2 percent GDP growth in fiscal year 2013/14.
Some of the growth can be attributed to weak economic performance in the previous year.
The first quarter of the 2013/14 fiscal year, which spanned July-September 2013, coincided with the overthrow of Mohammed Morsi and subsequent social and political instability. Political violence, emergency law, a nationwide curfew and widespread power cuts suppressed the economy, leading to a quarterly growth rate of just one percent.
Even accounting for the base effect from last year, the figures announced Monday still show significant growth, says Mohamed Abu Basha, economist at Cairo-based investment bank EFG-Hermes. If growth in the first quarter of 2013/14 had been a more typical 2.2 percent, the first quarter growth rate for the current fiscal year would stand out, at around 5.7 percent.
The figure is higher than anticipated, Abu Basha told Mada Masr. “We were expecting 4.5 percent. We were not expecting 6.8 percent.”
Araby attributed the growth rate to a 26.5 percent increase in manufacturing, especially in industrial activities, including tobacco, metals and electronics, vehicles, printer products and medical devices. Construction, driven by the Suez Canal expansion, grew by 9.1 percent.
Abu Basha notes that tourism figures have shown strong growth in recent months, especially for Arab visitors, and that government spending on roads and the Suez Canal has helped buoy the construction sector.
The level of growth in manufacturing reported by Araby was “surprising,” Abu Basha said, especially considering the ongoing energy shortages throughout the summer of 2014. “It is a little bit challenging to reconcile these figures.”
The Ministry of Planning has yet to release data that will allow economists to assess and analyze this reported growth. “It’s just a headline figure, not a lot of details were given,” said Abu Basha.