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Egypt sees major decline in consumer confidence in Q1/2013: Nielsen

Consumer confidence in Egypt takes nosedive in this year's first quarter, according to global assessment organisation Nielsen

Bassem Abo Alabass, Thursday 16 May 2013
Egypt
File photo: Protesters opposing Egyptian President Mohamed Mursi demonstrate in front of the presidential palace in Cairo December 18, 2012 (Photo: Reuters)
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Egypt has suffered the steepest decline in terms of consumer confidence out of 58 countries worldwide, shedding 20 points from global assessment organisation Nielsen's Consumer Confidence Index (CCI) in the first quarter of 2013.

Egypt registered 74 points in the CCI, coming in last among Middle Eastern and North African states, due to ongoing political instability and economic malaise.

"The decline of consumer confidence in Egypt comes as no surprise as the country's unsettled political conditions and civil unrest continue," said Nielsen-Egypt Managing Director Rammohan Rao. "Labour strikes in Egypt have increased since the revolution and several factories were forced to shut down due to protests."

"Tourism has also been negatively affected as well as foreign investment, consuming Egypt's foreign reserves, which are down nearly two thirds from before the uprising," he added. "With little money to spend and high inflation, Egyptians have been forced to implement further belt-tightening measures in 2013."

One indication of political unrest is the appearance of a new opposition initiative that has gathered more than 2.5 million signatures in support of calls to withdraw confidence from President Mohamed Morsi, Egypt's first-ever democratically-elected head of state.

Abdel-Hafez El-Sawy, a member of the economic committee of Egypt's ruling Freedom and Justice Party (from which President Morsi hails), questioned the index's credibility.

"A number of surveys and indices have exaggerated Egypt's bad image, as they are based on a small group of people who don't represent the entire country," he said.

"I'm not saying the situation in Egypt is perfect – yes, we need to re-establish security to encourage the return of investors – but the country also has some positive indicators," El-Sawy told Ahram online.

Economic activity in major sectors of the Egyptian economy has slowed down significantly since the popular uprising that toppled Hosni Mubarak two years ago. Investment and tourism have dried up, prompting a drop in the Egyptian pound's value against the US dollar.

Egypt's Net International Reserves (NIR) grew by around $1 billion in April, registering the first increase since October of last year due to Libyan cash deposits in Egypt's central bank.

Total NIR reached $14.42 billion by the end of April 2013, up from $13.4 billion at the end of the previous month.

Egyptian Tourism Minister Hisham Zaazou also recently stated that tourist arrivals to Egypt were close to their 2010 peak, when some 14.7 million tourists visited Egypt generating $12.5 billion in revenue.

According to Nielson's CCI, South Africa saw the largest rise – climbing 3 points to 79 points in the first quarter of this year – while the United Arab Emirates, which topped the region in the fourth quarter of last year, declined 5 points to 108 in the period between January and March.

Israel rose one point to reach 91 points in the first quarter of 2013 from the previous quarter.

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 29,000 respondents with internet access in 58 countries.

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