Central Bank of Egypt Headquarters in Cairo (Photo: Reuters)
Egypt's GDP saw a slight growth of 0.04 per cent in the second quarter of 2011, official data showed on Thursday.
The figures demonstrate an improvement on the year's first quarter, when the Egyptian economy shrunk 4.2 per cent.
Total GDP for the entire 2010/2011 financial year reached LE894 billion, leaving average GDP growth at 1.8 per cent, significantly below earlier predictions of 2.6 per cent.
"The drop in overall economic performance is attributed to domestic adversities such as the security vacuum and sectarian strife as well as regional problems in Libya and Sudan, and tensions on the border with Israel," said Minister of Planning, Fayza Abul Naga, speaking at a Thursday press conference.
By comparison, GDP grew by 5.1 per cent in the 2009-2010 financial year.
Egypt's budget deficit fell to LE29.8 billion in the April to June quarter from LE31.6bn in the previous quarter, it was also announced.
PAbould Naga pointed out that positive growth in several economic sectors as well as slowing declines in other sectors was the major reason for the improvement in GDP growth between the first and second quarters of 2011.
The manufacturing sector, which constitutes 28 per cent of GDP, saw its decline slow to 3.8 per cent compared to 11.4 per cent in 1Q2011.
"The business community continued to operate despite the security concerns, the government deems this as very patriotic," Aboul Naga said.
Another positive indicator contributing to the GDP improvement is the growth in non-petrol exports, up 37.3 per cent in 2Q2011 versus 31 per cent in the previous quarter.
Other sectors recorded positive annual growth in the second quarter of 2011 such as construction, transportation and retail which gained 0.3 per cent, 3.4 per cent and 2.1 per cent respectively.
All three sectors showed negative growth in the first quarter.
Aboul Naga indicated during the press conference that tourism continues to be one of the sectors most affected by Egypt's uprising, down 5.9 per cent in 2010/2011. Tourism revenue in the year to the end of June was $10.6 billion, the ministry also announced on Thursday.
“The continuation of protests has taken a heavy toll on tourism; it had started to recover in July, but the million man march carried out on 8 July set it back once again” Aboul Naga explained.
When asked about growth expectations for the current financial year 2011/2012, Aboul Naga did not give a concrete answer but expected a gradual improvement in growth.
"Major improvement is predicted to witness a positive leap in the second half of the current year," she said.
Other government departments have previously floated a growth figure for 2011/12 of 3.5 per cent.
Private investment was also still positive, despite its low contribution to total investment, Aboul Naga added.
"Despite the negative security situation, the private sector still managed to grow by 35.4 per cent in 2Q2011 over 1Q2011. It still contributes 55 per cent of total investment versus 70 per cent during the last two quarters of 2010," she added.
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