Oct. 13 (Bloomberg) -- The Egyptian economy expanded an annual 5.6 percent in the third quarter, boosted by tourism, manufacturing and construction, cabinet spokesman Magdy Rady said today.
Growth accelerated from a revised rate of 5.4 percent in the previous three months. The government had initially said the economy expanded an annual 5.9 percent in the period between April and June.
“This is slightly better than our forecast,” said Alia Mamdouh, an economist at Cairo-based investment bank CI Capital. She had forecast 5.4 percent growth for the first quarter.
The government expects the economy to expand at least 6 percent in the current fiscal year through June, compared with a revised rate of 5.1 percent in the previous year. The economy of the most populous Arab country relies on manufacturing, tourism and foreign direct investment for growth. These factors helped gross domestic product expand at an average rate of 7 percent in the three fiscal years through June 2008.
In the third quarter this year, manufacturing grew 6.2 percent in the quarter, the cabinet said in a statement distributed to reporters today. Revenue from tourism increased 12.1 percent, as did income from the Suez Canal, according to the statement. Construction expanded 12.5 percent, wholesale and retail 7.1 percent, while communications and information technology grew 11.8 percent.
“To reach a growth rate of 6 percent, there should be a sustained recovery in private investments,” said Mohamed Abu Basha, an economist at Cairo-based investment bank EFG-Hemres Holding SAE.
Private investment dropped to 47 percent of total investments in the fiscal year that ended in June 2009 from 64 percent in the previous year, according to the Economic Development Ministry. The government aims to bring the share of private investment this year to 62 percent.
The central bank lowered its benchmark interest rates six times in 2009 to support economic growth. It has kept them unchanged at their lowest level since 2006 for almost a year.
In September, the bank’s Monetary Policy Committee justified keeping the rates on hold by saying that uncertainty about global economic growth may weigh on domestic investment. It also said that non-food inflation remained subdued.
Egypt’s benchmark EGX30 stock index has gained 11 percent this year, according to data compiled by Bloomberg. Egyptian Resorts Co. gained 27 percent.
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