Retailers waiting for stability

Retailers in Egypt are keeping their fingers crossed for a broader stabilisation of the country’s economic and political scenes, following several months of upheaval and uncertainty that has dampened overall consumption. There are a few encouraging signs pointing towards a gentle increase in consumer spending later in the year, but any improvement will be heavily dependent on the performance of the newly-elected president and the ongoing recovery of the country’s economy.

According to the latest projections by the International Monetary Fund (IMF), Egypt’s economy will expand by 1.5% in 2012, down from 1.8% GDP growth in 2011, which in turn was a noticeable drop from 2010’s 5.1%. With unemployment forecast by the World Bank to remain at around 12% this year, a sizeable portion of the Egyptian population will not be in a position to indulge heavily in consumer spending, instead having to direct available income to staples.

Most Egyptians are apparently choosing to err on the side of caution. The latest Nielsen Global Survey of Consumer Confidence and Spending Intentions, issued in early June, showed that Egyptians have mixed feelings about the state of their country’s economy and how it will affect their spending patterns for the rest of the year.

There was a slight improvement in consumer sentiment in the most recent survey, which covered the first three months of 2012, with confidence ratings up five points to 97, just short of an optimistic outlook. While 85% of respondents said Egypt was still in a recession, down from 90% at the end of 2011, more than half believe the economy will be back into positive territory by the end of 2012.