Egyptian consumers say they are less likely to spend more, as their perceived income levels fall and they become more doubtful of the government’s economic policies, according to a report from the government’s official think tank.
The monthly report, published on Monday by the cabinet’s Information and Decision Support Centre (IDSC), shows that the Consumer Confidence Index (CCI) fell 8 % to 98.1 points in April, as compared to the previous month.
The survey reveals that the decline is driven by a sharp drop in the index for families’ income levels, down by 13.2 % to record a mere 47.2 points.
This indicates that families perceive their income levels as declining and are less likely to purchase durable goods like home appliances and furniture in the near future, despite a 2.3 % rise in average annual salaries to LE 26,161 (USD 3,756) in the fiscal year 2012/13.
Egypt’s unemployment rate remained unchanged in the first quarter of 2014 at 13.4 %, while annual inflation in the year leading to April eased slightly to 9.1 % to register the least rise since November 2013.
The CCI also declined due to falling confidence in government policies, despite plans by the government to reform the state-run business sector, stimulate the economy and attract further foreign investments.
Consumer sentiment towards the government’s economic policies fell 5.7 % to register 81.5 points, which demonstrates their doubts that these policies will boost the economy, particularly their living standards.
But Egyptians are pressured on a daily basis by rising insecurity and continuous blackouts, analysts say.
During the past few months, discussions over government plans to restructure fuel subsidies and limit the amount of subsidised bread available to each family have taken over the media.
Participants in the survey do not expect the state of the economy as a whole to improve in the coming year, which means they expect their own living standards to remain stagnant as well – evident in the 7.5 % fall in the relevant index to 165.7 points.
Egypt’s presidential elections are scheduled to take place in late May, with former defence minister Abdel-Fattah El-Sisi competing against Nasserist politician Hamdeen Sabahi.
While El-Sisi has promised he will raise Egyptians’ living standards within two years, Sabahi contends that Egypt’s economy can be improved through rebuilding the state-run business sector and giving a push to small and medium-sized enterprises.
Source: AlAhram Online