Publications
Partners
Cairo - Egypt is in the early stages of an export boom, suggesting its economy could begin to recover in the next few months if a minimum level of political stability is restored.
Helped by a falling Egyptian pound, non-oil exports have grown at double-digit annual rates since early this year despite violence on the streets and deep uncertainty over the country's political future.
Egypt's export sector accounts for only slightly more than 10% of the overall economy, and this relatively modest contribution cannot by itself end high unemployment or generate enough tax revenue to fix the government's shattered finances.
But the surge in exports, which has received little publicity amid this year's flood of bad economic news from Egypt, shows many manufacturers are finding ways to ride out the political turbulence - and could enjoy strong growth if the country eventually gets a stable government.
"It's a good sign if they're managing to achieve that kind of export growth, especially in the current environment," said John Sfakianakis, chief investment strategist at MASIC, a Riyadh-based investment firm.
Overall Egypt still runs a huge merchandise trade deficit, which was $23.8bn in the financial year to March, although this was already 2.7% narrower than in 2011-12 as exports grew and imports remained steady.
In the separate energy sector, which accounts for about a fifth of overall exports, Egypt has sharply cut back natural gas shipments, diverting supplies to the domestic market to avoid power shortages.
Recovery
Egypt's non-oil exports grew strongly for much of the past decade, rising 18.5% to $18.6bn in 2011, the year when Hosni Mubarak was overthrown, according to the State Information Service.
Their growth plunged last year as the election of Islamist president Mohamed Mursi worsened political tensions and deterred investment; industrial unrest, poor security, fuel shortages and difficulties obtaining finance hit many companies.
Non-oil exports inched up just 2% in 2012, less than half the rate of consumer price inflation. But shipments began to recover around the start of this year, rising 7% from a year earlier in the first two months of 2013.
Trade minister Mounir Fakhry Abdel Nour told reporters that non-oil exports jumped 21% year-on-year in June, a month when big Egyptian cities were rocked by mass protests against Mursi that led to his overthrow by the army on July 3.
In many ways, the operating environment for Egyptian companies has remained as tough as it was last year. But exports of low-technology, cost-sensitive products such as textiles, food and leather have jumped, businessmen say.
Textile exports rose 16.5% from a year ago, according to the Textile Export Council. Processed food exports climbed 26% year-on-year in the month of May alone, and were nearly twice their level in May 2010.
A major reason for the export recovery is the depreciation of the Egyptian pound, which makes shipments more competitive. Depreciation accelerated in the first half of this year.
There are also signs that some Egyptian exporters are starting to tap fast-growing demand in markets beyond Europe and the Arab world, their traditional focuses.
Non-oil exports to non-Arab African countries surged 28% from a year earlier in the first five months of this year. Exports to the Arab world climbed 20%, helped by an economic recovery in neighbouring Libya after its civil war.
