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Sun 25 Dec 2011 06:04 PM

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Egypt growth slows as turmoil hurts tourism, investment

Arab nation's foreign currency reserves tumble 44% in first 11 months to $20.2bn

Egypt growth slows as turmoil hurts tourism, investment
Tourists marvel at the Sphinx while Khufu pyramid looms behind (Getty Images)

Egypt’s economic growth slowed in the first quarter of the fiscal year, with the country’s worst political crisis in at least three decades leading to a contraction in tourism, manufacturing and construction.

Gross domestic product expanded 0.2 percent in the three months that ended Sept. 30, compared with a 0.4 percent growth in the previous three months, according to data released by the Ministry of Planning.

“This is far below our expectations,” Alia Mamdouh, an economist at Cairo-based investment bank CI Capital, said in a telephone interview. She had forecast a growth of 0.8 percent.

The turmoil that followed the ouster of president Hosni Mubarak in February prompted tourists to stay away and brought foreign direct investment down 93 percent in the first nine months of the year to $376 million, according to central bank data.

 Egypt’s foreign currency reserves tumbled 44 percent in the first 11 months to $20.2bn.

Tourism contracted 10.4 percent and manufacturing shrank 3.3 percent, the planning ministry said. Construction, which grew 0.3 percent in the last quarter of the previous fiscal year, shrank 2.8 percent.

Total investments declined 18 percent to 46 billion pounds ($7.6bn), according to the report. Revenue from the Suez Canal grew 8.4 percent and telecommunications expanded 3.7 percent, the data show.

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