30 - Talaat Moustafa Group

TMG ANNUAL REPORT 2008 25Market OverviewMarket OverviewMacro Economic IndicatorsEgypt has been witnessing a strong economic preformance overthe past four years, with a GDP growth rate reaching 7.2% inthe fiscal year 07/08. The construction and tourism sectors beingthe two main contributors in fuelling 07/08 GDP growth haverecorded a growth rate of 14.8% and 24.3% respectively.Egypt’s net FDI has shot up by a CAGR of 80% throughout 2003to 2008 reaching US$13.2 bn in 07/08. Net internationalreserves reached US$34.12 bn by the end of 2008, while inflationdeclined to 18.7% triggered by the drop in global commodityprices.The Egyptian Economy driven mainly by internal consumptionand enjoying a healthy financial sector with a low loan – depositratio of about 50% and low levels of outstanding mortgages (lessthan 0.5% of GDP) is set to be amongst the safest 5 economiesglobally poised to withstand the global financial crisis. And whilefalling global commodity prices are expected to dramaticallyreduce local inflation and reduce subsidy burden on thegovernment’s spending, the government announced an additionalspend of EGP 30 billion to stimulate economic growth.In 2008, the Egyptian real estate market continued to performwell with sales progressing and prices increasing. Fallingcommodity prices are driving stability and reductions in buildingmaterials costs (specifically steel and cement) which has beenallowing developers with strong financial positions to build fasterand at cheaper costs. However, there is a likelihood that reducedeconomic activity may affect the demand in the real estate marketespecially in residential developments versus office, retail andhotel developments putting an increased emphasis on productdifferentiation going forward.On the other hand, the global economic slowdown is expectedto affect Egyptian tourism revenues, Suez Canal receipts andexports with reduced real GDP growth rates forecasted to be inthe 4 to 5% range, still amongst the highest globally in the wakeof the global economic slowdown.FY Ending June 2005 2006 2007 2008Total GDP growth 4.6% 6.8% 7.0% 7.2%Sector as a % to totalconstructionand building 4.3% 4.6% 4.2% 4.6%Real EstateHotels and 3.8% 3.7% 3.7% 4.0%Restaurants 3.4% 3.3% 3.3% 3.4%Foreign Direct Investment (US$ bn)14121011.613.288.1643.822.10.702002 2004 2006 2008 2007 2008