How's the Egypt economy doing?

IMF preliminary conclusions on the state of Egyptian economy;

The task ahead is to sustain high job-creating growth.

6. Sustaining growth in the order of 6-8 percent will require investment to rise to around 26 percent of GDP, and reforms therefore need to continue to tackle constraints on business development, such as inadequate infrastructure, limited access to bank credit by SMEs, red tape, poor public service delivery, and the lack of skilled labor. Continued efforts are also needed to reduce the underpricing of energy, which remains an important distortion that risks attracting investment into sectors where Egypt may not have a long-run comparative advantage, encourages levels of energy consumption that impose high environmental costs, and uses up vast public funds that could be more productively spent, for example on education or infrastructure. Fuel subsidies recorded in the budget amount to 5-6 percent of GDP; however, valuation of domestic oil and gas production at world market prices would put the implicit subsidies substantially higher still. To ensure the domestic and external stability critical for sustaining high growth and investment, continued fiscal adjustment is needed to raise national saving and ensure sustainable public debt dynamics. A further strengthening of the framework for exchange rate and monetary policy will enhance the CBE's ability to smooth cyclical swings and shocks, while keeping inflation low.

7. A strong outlook for 2007/08 and continued favorable external conditions provide a conducive setting for the implementation of the reform agenda. Real GDP is expected to expand by about 7 percent, led by strong growth in investment and consumption. Inflation is projected in the 6-9 percent range as the impact of the 2006 supply shocks dissipate, as long as a prudent monetary policy stance is maintained. Exports and imports are expected to continue growing strongly, and a rising trade deficit will moderate the current account surplus. The overall balance of payments should remain strong though, as Egypt continues to attract FDI and other capital. There are some downside risks to the outlook: tightening global credit markets may contribute to a worsening of the external environment, such as lower global growth and less easy access to international capital markets. Also, reform fatigue may set in as some interest groups are adversely affected and parts of the public are disappointed with the pace at which reform benefits accrue to all strata of society.

For Discussion: Should we worry so much about jobless growth?