Egypt’s economic growth in the first quarter of fiscal 2008-2009 slowed to 5.8 per cent, economic development minister Osman Mohammed Osman recently said, in an indication that the global financial crisis was taking a toll on the economy. The decline in GDP growth—from 6.5 per cent in the first quarter of fiscal 2007—was largely linked to a drop in construction sector growth, from 14.4 per cent to nine per cent. Offsetting the decline was a growth in the key petroleum sector. While inflation stands at over 20 per cent, the country may be hit by a drop in tourism, Suez Canal revenues and foreign investment. GDP growth is still expected to average about 6 per cent—down about one percentage point from fiscal 2007-2008. Last year’s growth rate was largely attributed to the success of ambitious efforts launched in 2004 to lower taxes, sell off public assets and shore up the financial sector.
Egypt willing to fight
Egypt is willing to intervene militarily against piracy in the Gulf of Aden and off the Somali coast, alone or as part of an international force, Moufid Shehab, minister of state for legal and parliamentary affairs has said. The Somali-based pirates threaten to cut into Egypt’s Suez Canal revenue by pushing ships into using the Cape of Good Hope route around Africa instead of using the canal to travel between Asia and Europe or America. At least three major shipping companies have said in the past few days that their ships would avoid the canal, fearing pirates would capture their ships and hold them for ransom. Many countries have sent warships to the Gulf of Aden to deter piracy but the area is vast and they cannot prevent every attack. Once the pirates take a ship and hold the crew hostage, any rescue attempt endangers the lives of the crew. Naval experts say the Egyptian navy has enough suitable ships to make an effective contribution to an anti-piracy operation.
Suez Canal revised
Transit fees for ships transiting the Suez Canal next year are being revised, Suez Canal Authority Chairman Ahmed Ali Fadel recently said. The new fees will take into consideration the international financial crisis, oil and gas prices, reduced global growth rates, and the ship building market, he said. Fadel voiced concern over the rising piracy in the Red Sea and called for international cooperation to confront it. He did not rule out cuts in transit fees, but neither did he exclude a modest increase. The last figure on Suez Canal revenues cited $4.570 billion during the first 10 months of 2008, a 21.2 per cent rise over the 2007 revenue in the corresponding period.