Optimism builds for Egypt's economy in second half

The Egyptian economy has endured a torrid six months. While the Arab Spring brought an end to the 29-year reign of President Hosni Mubarak, the political upheaval also prompted economic paralysis, dragging down GDP growth and inflaming concerns among international investors that Egypt is an unstable destination for foreign cash. Surely, things can only get better in H2?

While the first six months of 2011 have been characterised by tremendous political upheaval in Egypt, the country's future may ultimately depend on its recovery from the economic paralysis which has gripped the Middle East and North Africa (MENA) region's second-largest economy since the unrest began.

As of June 14 the CASE Index, which includes the 30 most active stocks in the Egyptian stock market, was still down almost 22% since the start of the year - not far above its March lows when the market was down 31% year-to-date. And according to the Economist Intelligence Unit, real GDP growth in Egypt will drop to around 1.2% in fiscal year 2010/11 (July 1 to June 30) owing to the continuing impact of the political crisis.