Snapshot
It seems every day brings another juicy bit of news that ends up rocking the economy and investor confidence. This month it was the attack on the Israeli embassy that sunk share prices and dented hopes that political tensions between demonstrators and the military administration were finally coming to an end. The decisive sentencing of former steel magnate and National Democratic Party member Ahmad Ezz, while perhaps a sign that the judicial system is on the right track, did little to help matters for nervous investors and traders, and will likely lend next month’s barometer more gloomy news. 

Similarly, businesses said they were worried too. A whopping 85% of respondents believe the economy is going in the wrong direction, a 15% jump versus the September survey. Their uninspiring mood may be rooted in increasing debt loads, fewer acquisitions and decreasing sales, according to our results.

Most business leaders predict things will stay much the same in the short term, however, that could change now that the parliamentary elections have finally been confirmed for November 22. Yes, the elections will happen later than expected, but anything that might stabilize the country’s fragile balance will certainly be seen by the business community as a good thing.

 

The Insider
Before we begin, Business Today published figures that did not match the graph depicting companies’ sales over the past three months, so we are including them in our column this month. In September’s barometer, 22.8% of companies reported sales had dropped strongly, whereas 31.7% said sales had fallen slightly. Another 11.9% claimed their sales figures had increased slightly, with only 1% of companies saying sales had jumped strongly.

Their responses were much more positive than this month’s barometer. Some 45% say sales have dropped slightly. Around 3% claim sales slipped sharply, while 40% said sales had stayed much the same.

Some respondents predicted better results in the next three months. (Around 42% forecast higher sales.) But most, some 52%, aren’t putting all their eggs in one basket and think business will be similar.

In terms of investment, more companies are wading out into the fray and looking to spend cash to make cash. Around 26% of respondents described their strategies as aggressive, while another 5% claimed they were very aggressive. As for the rest, 27% described themselves as neither aggressive nor cautious, while 36% and 6% said their investment actions were either cautious or very cautious.

One new trend appearing on this month’s barometer involves debt. Around 21% of those surveyed reported that their debt has already increased or would increase.

In the News
The attack on Israel’s embassy near the Giza Zoo in Cairo was the top news event, according to companies. The storming not only resulted in clashes between security forces and protesters, but an emergency cabinet meeting and promises to respond with force to protect public buildings. The second ranked news event is the ongoing media spectacle that is the trial of deposed President Hosni Mubarak. The decreasing value of the euro came in third.


 

The Forecast
We’ll certainly see if the newfound date proposed for the MP vote will boost confidence next month. For now, respondents are still worried over the economy and Egypt’s less than robust business climate. Some 19% predict the situation will worsen in the short term, while the majority, at 68%, think there isn’t much change on the horizon. As is the norm, those surveyed feel the government is responsible for their lackluster predictions, followed by the global economy, inflation, the stock exchange and their own policies and strategies.

Again, the silver lining is about two years off. About 89% of those surveyed predict things will improve greatly in the next two years or so. Only 10% and 1% forecast similar or grimmer tidings.

Like last month, most companies are looking to provide their own opportunities, with 68% of companies signing on new clients. The highest numbers were reported by medium-sized firms in the service and trade sectors. Only 6% of companies are hiring new employees, though firms are hopeful this will change in the future. Around 20% of firms say they plan to grow their numbers slightly in the next few years. 
Another 20% of enterprises are launching new products. bt