Snapshot
There’s little that analysts and forecasters enjoy more than making predictions as the New Year opens. Unfortunately, the Arab Spring is a difficult creature to predict, particularly in Egypt. With the success of the first two rounds of voting, it seemed Egypt was finally on its way to a new norm — but that didn’t last long, leaving violent clashes in the minds of Egyptian and foreign investors alike.

The mounting deaths and uncertainty has got our respondents wondering if the military can fulfill its promise of paving the way to democracy and jump-starting the economy, which will likely affect the answers from those surveyed in our monthly barometer in February.
As for this month, some 61% of our respondents think the economy is moving in the wrong direction, while only 39% are looking at Egypt’s precarious situation with rose-tinted glasses. Their sentiments are more positive overall than last month, when just 18% felt the economy was strengthening, albeit slowly.

Business leaders were also more cautiously optimistic about their performances in the near future. Just 9% predict they will be worse off in the next three months. Another 63% say they will likely do similarly, while the rest forecast growth, despite lingering uncertainty. Their estimates improve further two years down the line — only 3% say things will likely get worse for their companies, whereas 67% feel their firms will be better off.

The Insider
When it comes to sales, more is always better, according to the business community. This month 39% of companies surveyed say sales had decreased slightly, which is 2% better than December’s barometer. Some 6% pointed to increasing sales, with another 41% reporting similar figures. But not all the news was good: The other 14% claim sales have dropped dramatically, which is never a good sign for the economy. Some of the firms say high prices, instability and their own company policies prompted their answers.

The majority of those surveyed predict the coming three months will herald much of the same. But there is also 1% who say they are expecting strong sales, with another 39% hoping for slightly better results, even though markets will likely still be unstable. Again, these responses are more positive than they had been in November, when 15% forecasted slight drops in sales.

By 2014, the majority are hopeful that the instability will have run its course and leave firms able to get back to business. However, for that to happen, their banks accounts will have to be balanced, which could pose a problem. Some 59% of respondents described their businesses as strongly constrained by finances, with another 14% reporting slight constraints.

In the News
E gypt’s first parliamentary elections since the fall of President Hosni Mubarak was the top news item for this month’s barometer, followed by the appointment of new Prime Minister Kamal Al Ganzouri. Ranked third was the elections runoff. Other news that piqued their interest included the Tahrir sit-in and the growing political clout of the Muslim Brotherhood.

The Forecast
Taking a glance at the economy, few are seeing a silver lining in the next three months. More than half of our respondents say things will stay the same for Egypt’s struggling economic drivers. Some 23% disagree, predicting worsening conditions, while 26% believe the opposite. Last month 45% predicted little would change, with just 9% hoping for brighter economic days.
In operations, the biggest news is that none of the companies surveyed are making major acquisitions. This comes despite the fact that 19% describe their investment strategies as aggressive. Another 9% say they are using a very aggressive strategy.

In more uplifting news, 49% of respondents are signing new contracts or clients across the board, with large firms doing the best business. Just over a fifth of firms are also launching new products, with large companies and industrial firms taking the lead, particularly in the trade sector.
But few are looking at hiring new employees, which could change in the future. Around 25% say the size of their companies will increase slightly in the next two years. Another 56% claimed their size will remain pretty much the same. bt