Egypt's economic growth may reach an annualised rate of 4.5 percent in the second quarter of 2009, but it was still too early to say the economy had turned a corner, Egypt's finance minister said on Thursday. "Things are beginning to pick up. The outlook is not as bleak as we thought, and it is not going to be as difficult as we thought, exactly mirroring what is happening to the rest of the world," Finance Minister Youssef Boutros-Ghali told Reuters.
Egypt's growth had already risen from 4.1 percent in the fourth quarter of 2008 to 4.3 percent in the first quarter of this year, he said on the sidelines of a conference in Cairo. "That's a good sign, but we need to see another quarter where the growth grows more to be able to say we have turned the corner," Boutros-Ghali said.
He said growth in the second quarter could "maybe" reach 4.5 percent. Poverty rates, however, had risen since the crisis, Boutros-Ghali said. "Five years ago, the poor represented 20 percent of the population. Just before the crisis we had managed to get this number down to about 15.5 to 16 percent and we were making progress... Poverty rates have gone up from 15.5-16 percent to maybe 18.5 now," he told the conference.
He added: "We're hoping we won't lose all of the progress we've made over the past five years." A series of reforms initiated in 2004 had boosted Egypt's growth rate and helped bring down its budget deficit. Boutrous-Ghali said Egypt had intensified poverty reduction schemes since the crisis, and increased funding available for the poor at the expense of other programmes.
Analysts say Egypt is flush with cash helping the Arab world's most populous nation ride out a global crunch in credit. But the downturn in the world economy has hurt key earners such as tourism, Suez Canal receipts, oil and gas export revenues and remittances from workers abroad.
However, the investment bank EFG-Hermes has said that the surprisingly strong first quarter growth rate of 4.3 percent could not be sustained, partly because rising unemployment and weak external demand would weigh on private consumption. The central bank cut its overnight deposit rate by 50 basis points to 9.5 percent and its overnight lending rate by 100 basis points to 11 percent on May 15, a move analysts said was to boost lending by Egypt's relatively conservative banks.