Egypt's consumption panorama is brightening in some areas but the average household finds it increasingly difficult to make ends meet.
One of the bright spots related to Egyptian private sector consumption results from a gradual recovery in tourist arrivals. At the end of 2003, tourist arrivals were running 2.6 percent higher than a year earlier. Assuming that there is no destabilizing incident, the number of arrivals is likely to increase moderately again this year. That, in turn, will contribute to an increase in sales of tourism-related goods and services of from 3 to 5 percent this year.
Another Egyptian bright spot is related to the government's use of information technology to develop a better informed and healthier consumer base. The investment in hardware and software should pave the way to developing a work force qualified for higher paying jobs at home and abroad.
Unfortunately, most of the barriers to long-term growth in Egyptian household consumption remain in place. The International Monetary Fund estimates that Egypt must achieve growth in its gross domestic product of at least 6 percent per annum in order to create the 600,000 new jobs a year needed to accommodate growth in the job force and to absorb those currently seeking employment.
Job-related concerns are undermining consumer confidence at a time when household discretionary income is on the decline. As a result, Egyptian families are generally reluctant to make high-end...