Sunday, June 11, 2006

Egypt's economic outlook

In the coming months, this is something I hope to write about a lot more. It's a topic that can be overwhelming, especially for someone (full disclaimer) with little economic background. Cairo is a sprawling city with upwards of 15 million residents, and while economic indicators can help to explain certain aspects of Egypt, they hardly paint a clear picture of what life is like here. I suppose the best 'big picture' you can find is provided by the IMF. The International Monetary Fund ensures the stability of exchange rates, provides economic advice for developing (and, less forcefully, developed) economies and is a lender of last resort during economic crises. IMF reports are critical for developing nations. A positive report causes private investors to put money into an emerging economy. A bad report can eliminate foreign investment. In April, the IMF released a largely sunny progress report. There are other stats one can throw out: the growth rate is around 6%, unemployment is close to 11 percent, (comared to 4.6 percent in the US) and the US dumps in about 800 million dollars in economic aid annualy (plus another 1.3. billion in military aid)

Jay Nordlinger of the National Review attended the World Economic Forum summit in Sharm elShaikh and described Egypt's economy this way:
"Egypt may be having problems on the political front, but they are making big strides on the economic front. And they're happy to trumpet it. On the roads to Sharm El Sheikh's Congress Center--specially built for this conference, in under eight months--are signs: "Egypt: Open for Business"; "Egypt: Open for Competition"; "Egypt: Open for Growth"; "Egypt; Open for Change." These are not empty claims, for the facts back them up. Tariffs, taxes, and other barriers are falling; GDP is rising (by a profected 6 percent this year). Inflation has been subdued. Foreign investment is pouring in, and the Egyptians are asking for more."

For most people here, though, I imagine such a simple picture doesn't really fit. There is a lot of construction going on in Cairo, but there's also a lot of rubble. Walking by the American embassy the other day, my roommate was astonished to find a high-rise building in the same condition that it had been in (no walls, electrical wires jutting out every which way, a work crew milling on the sidewalk) the day he'd left Egypt, 12 months ago. The story may be anecdotal, but the building was within a block or two of the American embassy, in the wealthies part of the city. What you see walking the streets is the incredible gap here between rich and poor. According to an Egyptian student I met, the middle and upper classes here just don't have the same sense of social awareness you find in the states, primarily because the situation here seems so hopeless. In an odd reversal, western fast food changes charge prices that the average Egyptian could never afford, and cater to the rich, primarily local, upper class. The banking system may be improving, but most people don't use it. We pay our rent in cash. We pay for meals in cash. We get our stipends in cash. Some places do accept credit cards, but only those that are frequented by western clients. Immediately upon arrival, I had to take out a few hundred dollars from Citibank in order to pay the first month's rent and deposit. I ended up helping an Egyptian man who was using the stall next to mine. He was short, with graying hair, perhaps in his early 50s. It was apparent he had never used a touch-screen before.

Perhaps the best example of the economic gap here can be found in my neighborhood. There's a Mercedes-Benz dealership, fully stocked with new model luxury cars. This morning, there were perhaps a dozen young men out front, cleaning the windows in preparation for business. A hundred yards away, women sit on the corner and sell spices and vegetables off of carts, while others walk donkeys down the street (perhaps for my next post I will investigate where the hell these donkeys come from, and where they go).

Of course, the main problem for me is one of perspective. First, I've only been here a week, so I can't comment on what Egypt looked like years ago. But perhaps a bigger problem is that I judge by American standards. The poverty here is real, but to assume a booming economy here will resemble a booming economy in the West is obviously unfair.

1 Comments:

At 4:40 PM, Blogger Simon said...

I've been checking just about daily and really enjoying the blog -- keep it up, especially the funny stories -- you're an impressive writer! (Though not necessarily the most impressive spell-check-user...) By the way, under Alison's influence, I've been watching just about all of the World Cup. Go Cote d'Ivoir!

 

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