Egyptian Trade Minister Sees Green Light for Growth
QUEST: Shares in Egypt climbing this week to their highest levels since the last days of September of '08. Investors were optimistic, pretty much mirrored by the government, says the country is putting the economic slowdown behind it. Look at the numbers. GDP growth is accelerating to 5 percent or more this year -- in this year. So 5 percent. The economy has been bowling along at a heady 7 percent until the global recession. So we went from 7 down to 4.7. But now back to 5 in the latest annual figures. The main structures of the Egyptian economy, tourism, trade, inward investment, all went up into a slump. Entirely predictably, the Suez Canal, of course, exports were down by as much as 14 percent to over $25 billion. In that scenario, it's impressive that Egyptian growth has recovered back up again. The shock was mainly external because Egyptian banks didn't have to prop up banks, though Egyptian banks weren't exposed to toxic assets. The country now is faring much better. Now obviously the Egyptian trade minister, Rasheed Mohamed Rasheed, is going to put a brave face on the numbers, but when he suggested, as you'll hear now, that Egypt had decoupled, well, that was worth taking on board.</s>RASHEED MOHAMED RASHEED, EGYPTIAN TRADE MINISTER: Well, we definitely are in a place better than what we expected. You rightly said the banking system was intact, we did not have any problems, toxic assets, toxic loans, or any of the international problems. But we were expecting a bigger drop in Suez Canal and the tourism and the export in foreign direct investment. We did have the drop in all of these. But the numbers are much better than what we expected. Today we are growing at 4.7 percent compared to 7-plus percent before the crisis. We were expecting lower growth. And we are hoping to get to 5 percent in the next fiscal year.</s>QUEST: That, of course, is also coming on the back of a certain degree of fiscal stimulus, a certain degree of borrowing, which cannot be maintained indefinitely.</s>RASHEED: No, but we were not in any way exaggerating all of this. We have maintained our fiscal discipline. We had a fiscal deficit of 6.3 percent, lower than what we anticipated. And despite the stimulus package, we are going to remain below 7 percent.</s>QUEST: Why do you think -- and one thing we are seeing, not just in Egypt, but in other countries, why do you think economies are performing perhaps better than we had expected, even though we're still being told it will be a long, hard slog recovery?</s>RASHEED: I think decoupling is happening, despite everybody else...</s>QUEST: Ah!</s>RASHEED: Decoupling was a theory, but I think the numbers today confirm that there is a decoupling.</s>QUEST: Who is decoupling from whom?</s>RASHEED: I think it is clear that some of the emerging markets, who have been adamant and clear about the reform program, they are decoupling from the United States and the West. And that is including China, India, Egypt is definitely one of these economies where since we started reform in 2004, we have created a momentum that is keeping us moving forward.</s>QUEST: You have -- that's a -- I mean, that's an interesting theory, or do you think it's in practice?</s>RASHEED: Well, this is all of the numbers confirming it. Today we are growing at 4.7 percent, compare that to Europe and the United States, and the potential of continuous growth, that is also confirmed that there is definitely decoupling happening here.</s>QUEST: But then your markets -- your exports markets for your agricultural goods, your tourism markets, your Suez Canal markets, they are all the countries that you're coupled with.</s>RASHEED: Yes, but that's true. I mean, I mentioned to you that we have seen a drop in all of these areas, but despite that, local consumption, the local activities, the investment and infrastructure, the local demand have made up for all of those losses. And I expect us to continue, because despite of those losses, we have already increased 4.7 percent. So I expect us to continue positively.</s>QUEST: What's the one thing you want to hear from Pittsburgh, where, of course, your own finance minister is taking part in the negotiations and the discussions? But as a trade minister, what's the one thing you want to hear from Pittsburgh?</s>RASHEED: Well, my hope is this view -- of domestic views and of domestic feelings coming will not actually disintegrate the global unity again versus the crisis. So my hope what we will get out of Pittsburgh, that the world will continue its reform, especially on the financial sector. We need to see that reform continuing. But unfortunately there are a lot of signs today that this is starting to disintegrate here.</s>QUEST: The traffic lights, I think I probably know what color you may go for after the tone of our interview, but I won't be presumptuous, Minister. Red obviously is deep in recession, and the things that -- well, you can guess. Green, things are moving forward. Which light is it for Egypt?</s>RASHEED: Egypt is moving forward. It's greening.</s>QUEST: All right. We're making it flash for the minister there. First green of the program, you might be surprised what else you're going to see before the end of the show. She has tackled the bonus culture. She has tackled the G-20 agenda. When come back in a moment, Christine Lagarde says France cannot accept a camp housing illegal immigrants at Sangatte. It's further part of our discussion