Egypt’s economy exceeds expectation despite pandemic

Students are being transported by their family members on motorcycles during the first day of school, following months of closure due to the coronavirus disease (COVID-19) outbreak in the Giza suburb of Awsim, Egypt October 18, 2020. (Reuters)
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Updated 19 October 2020

Egypt’s economy exceeds expectation despite pandemic

  • The IMF also expects a decline in the overall deficit of GDP to 5.2 percent during 2022-23

CAIRO: Egyptian Finance Minister Mohamed Maait said on Sunday that the financial performance of the Egyptian economy during the coronavirus disease (COVID-19) pandemic exceeded expectations, according to the International Monetary Fund’s (IMF) testimony in its Global Economic Outlook report for October 2020.

In an official statement, he said the economic reforms adopted by President Abdel Fattah El-Sisi had strengthened the Egyptian economy and made it resilient in the face of internal and external challenges.

He said much of that was due to the flexible handling of the pandemic, as the state adopted a proactive policy of allocating 2 percent of its gross domestic product (GDP) to support the most vulnerable economic sectors and groups. Steps were taken in a way that contributed to mitigating the shock and supported the national economy, he said.

The minister said the IMF expected the Egyptian economy to rapidly recover in the medium term and for the country to achieve growth rates higher than those prior to the pandemic.

The IMF also expects a decline in the overall deficit of GDP to 5.2 percent during 2022-23 and 3.8 percent by the 2024-25 fiscal year, reflecting the ability of Egyptian financial policies to deal positively and effectively with local and international variables.

“According to the estimates of the IMF, the state budget, despite the pandemic, will achieve a primary surplus of 0.4 percent of GDP during the current fiscal year, which will rise to 2.1 percent during 2022-23, and the trend will continue at a sustainable rate up to 2 percent on average until 2025,” Maait said.

The finance minister said the IMF expected Egypt to increase total state revenues during the current fiscal by 20 percent, compared to 19.2 percent in the previous year, continuing until the fiscal year 2024-25.

Public expenditures are also expected to decrease to 25.4 percent in the current fiscal year, compared to 28.4 percent last year.

Despite the IMF report indicating a state of ambiguity about the outlook for the global economy, the Egyptian economy’s outlook remained optimistic, Maait said, as the IMF has raised its estimate of the growth rate to 3.5 percent instead of 2 percent during the last fiscal year.

He pointed out that the state’s general budget recorded a slight initial surplus of 100 million Egyptian pounds ($6.39 million) during the first quarter of the current fiscal year, despite the repercussions of the pandemic, meeting the needs of the health sector, all budgetary bodies, greatly increasing government investments and paying pension fund dues.

He said the annual growth rate of revenues rose to 18.4 percent during July and September 2020, despite the continuing negative effects of the pandemic on economic activity, while the annual growth rate of expenditures reached 11 percent due to the increase in government investment allocations, the provision of support allocations and social protection programs, and increased spending on health and education.

Big week for Big Tech as earnings, hearings loom

Updated 25 October 2020

Big week for Big Tech as earnings, hearings loom

  • The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years

SAN FRANCISCO: Big Tech is bracing for a tumultuous week marked by quarterly results likely to show resilience despite the pandemic, and fresh attacks from lawmakers ahead of the Nov. 3 election.

With backlash against Silicon Valley intensifying, the companies will seek to reassure investors while at the same time fend off regulators and activists who claim these firms have become too dominant and powerful.

Earnings reports are due this week from Amazon, Apple, Facebook, Microsoft, Twitter and Google-parent Alphabet, whose combined value has grown to more than $7 trillion.

They have also woven themselves into the very fabric of modern life, from how people share views and get news to shopping, working, and playing.

Robust quarterly earnings results expected from Big Tech will “highlight the outsized strength these tech behemoths are seeing” but “ultimately add fuel to the fire in the Beltway around breakup momentum,” Wedbush analyst Dan Ives said in a note to investors.

The results come amid heightened scrutiny in Washington of tech platforms and follow a landmark antitrust suit filed against Google, which could potentially lead to the breakup of the internet giant, illustrative of the “techlash” in political circles.

Meanwhile, Senate Republicans have voted to subpoena Jack Dorsey and Mark Zuckerberg, the chief executives of Twitter and Facebook respectively, as part of a stepped-up assault on social media’s handling of online political content, notably the downranking of a New York Post article purported to show embarrassing information about Democrat Joe Biden.

CEOs of Twitter, Facebook and Google are already slated to testify at a separate Senate panel on Wednesday examining the so-called Section 230 law, which offers liability protection for content posted by others on their platforms.

The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years and have weathered the economic impact of the pandemic by offering needed goods and services.

Google and Facebook dominate the lucrative online ad market, while Amazon is an e-commerce king.

Apple has come under fire for its tight grip on the App Store, just as it has made a priority of making money from selling digital content and services to the multitude of iPhone users.

The firms have stepped up lobbying, spending tens of millions this year, and made efforts to show their social contributions as part of their campaign to fend off regulation.

“For the most part, tech companies know how to do this dance,” said analyst Rob Enderle of Enderle Group.

“They don’t spend a lot of time bragging about how well they have done any more.”

Ed Yardeni of Yardeni Research said the outlook for Big Tech may not be as rosy as it appears.

“For one, regulators at home and abroad are gunning to rein in some of the largest US technology names,” Yardeni said in a research note.

Of interest to the market short-term will likely be whether backlash about what kind of content is left up and what is taken down by online titans causes advertisers to cut spending on the platforms.

Economic and social disruption from the pandemic also looms over tech firms, which benefitted early in the pandemic as people turned to the internet to work, learn, shop and socialize from home.

“Performance will be best for those providing solutions for people working at home,” analyst Enderle said.

Amazon, Google and Microsoft each have cloud computing divisions that have been increasingly powering revenue as demand climbs for software, services and storage provided as services from massive datacenters.

Amazon has seen booming sales on its platform during the pandemic, and viewing surge at its Prime streaming television service.

Enderle expressed concern that with the coronavirus disease (COVID-19) cases and a lack of new stimulus money in the US, tech companies could reveal in forecasts that they are bracing for poorer performance in the current quarter.