Snapshot
Not even Ramadan could boost investor spirits. The barometer reflects a more somber mood as Egyptians and companies are asked to do more with less and resources are stretched thinner than ever. Fewer businesses believe the economy is moving in the right direction, or that the interim government is doing enough to reverse the trend. This month, just over 70% of respondents said the economy was getting worse, versus just under 30% who disagreed.

Despite the gloomy mood, sales are steadily improving, albeit slowly, and investor confidence could get a much-needed boost from the ongoing trial of deposed President Hosni Mubarak, his sons Alaa and Gamal and former Interior Minister Habib El-Adly. But, as we’ve all learned over the past few months, any gains can quickly sink as Egypt’s political and economic stability take a turn for the worse. This became evident after renewed violence in Sinai and on the Rafah borders caused anti-Israeli protests in front of its Cairo embassy. The aftermath of this latest unrest, plus the ever-worsening eurozone crisis and the US’s downgraded credit rating are likely to show up in next month’s survey.

The Insider
Like August’s barometer, companies claim sales are getting better, even if they’re still not back to last year’s numbers. Only 6.5% of respondents reported strongly decreased sales, while another 20.8% said sales had dropped slightly. The numbers have improved compared to previous results when about 13% of companies said they had experienced heavy sales losses, with another 27% recording a slight decrease.

Most companies in this month’s barometer said sales had stayed much the same at 39.6%, whereas 30.7% reported that figures had increased slightly.

And, as usual, those better times are far in the future. When asked about their sales predictions in the next two years, the majority of companies forecasted their performance would improve, with few predicting similar or worse operations.

On the investment front, companies are still cautious. More than 50% describe their spending strategies as very cautious, while almost 28% are simply being cautious. Only 4% and 6.9% say they are pursuing either very aggressive or aggressive investment strategies in an unstable climate.

Luckily for Egyptian companies, the trend of sticking to self-funded ventures means the majority of firms aren’t strapped for cash because of debt. Almost 70% of companies say they have funds available if need be, while 17.8% report being strongly constrained by current finances.

In the News
As predicted, Mubarak’s trial, and its various twists and turns, is the top ranked news item for those surveyed. It is likely to continue captivating Egyptians as testimonies begin to be heard starting September 5. Respondents said the next biggest issue are the first trials of members of the regime, including El-Adly and other top National Democratic Party officials. The third item is the US debt crisis.

The Forecast

While deposed President Hosni Mubarak’s trial might be making headlines, the state of the economy is still front and center for Egyptian businesses. They are hoping that the upcoming presidential and parliamentary elections and a new government will bring with it signs of economic recovery that will subsequently herald a new dawn for domestic businesses, at least according to our respondents. Over 33% predict the economy will improve in the next three months, with 45.5% saying things will remain the same, whereas 90% predict it will grow within the next two years.

But it might be the private sector driving much of the growth, if this month’s barometer is any indication. Some 69% of companies are signing new clients, while 33% say they are launching new products. Another 17% and 15% of those surveyed reported hiring new employees and making major new acquisitions. The drive is primarily coming from large companies, with the highest number of new clients in the trade, construction and service industries. August saw similar numbers, but with fewer companies making acquisitions. bt

Operationally Speaking

Percentage of firms executing new projects