Egyptian economy fared better than many more developed economies during the downturn, with analysts forecasting 5.5 percent in the year to the end of June 2011. File photo shows the interior of Stars Centre shopping mall in Cairo. CAIRO: The owners of Cairo's City Stars mall like to compare it to a Pharaonic temple. Many brands on display - such as Zara, Hush Puppies or Etam - may seem drearily familiar to a Western eye, but the vast shopping center drew bigger crowds than the Pyramids of Giza in the year after it opened, underlining Egypt's growing reputation as a frontier retail market with major potential. The French cakes, Spanish socks, Asian meals and skimpy Brazilian underwear available in City Stars are out of reach to most Egyptians, a fifth of whom struggle on less than $1 a day, according to a United Nations estimate. Free-market reforms that spurred years of strong economic growth have not created enough jobs to rid Cairo of its teeming slums, but they do make it easier to invest, to import and sell to the middle class and repatriate the profits. Growing purchasing power and a consumer base expected to grow at 2 percent per year is keeping foreign investors upbeat on Egypt, outweighing the downside of red tape, inflation and uncertainty over the future leadership as the country heads toward a presidential election in 2011. Those Egyptians with money left over after feeding their families can spend it in a plethora of malls, hypermarkets and boutiques that have sprung up in Egypt's big cities in a decade. “Ten years ago, my husband and I did all our shopping abroad. Now I buy almost everything here - clothes, electronics, kid's toys, everything,” said Dina Ahmed, a 42-year-old marketing executive visiting City Stars. Tax cuts, privatizations and other reforms since 2004 pushed Egypt's economy to its fastest growth in almost two decades, reaching 7.2 percent before the global financial crisis hit. The economy fared better than many more developed economies during the downturn, growing by around 5 percent, with analysts forecasting 5.5 percent in the year to the end of June 2011. “The market in Egypt is different to any other market. There was recession abroad that was not felt. There were problems in Dubai, Kuwait and Lebanon. But we didn't feel it,” said Adel Al Bana, senior operations manager of Fashion International Group, which brought brands including Mango to Egypt. City Stars, which lies far from central Cairo and near the main airport, drew an annual 22 million visitors when it opened three years ago, according to analysts. About 12.5 million tourists came to Egypt in 2009, government figures show. Much of the appeal lies in its 6,000 car park spaces and shiny-clean air conditioned interior, which contrasts with many older, open-air Cairo shopping areas with their grimy, uneven and pot-holed pavements, pollution and sweltering summer heat. The scale of the $800 million complex has ensured its cachet, with a 21-screen cinema, 643 shopping outlets, dozens of restaurants and cafes, prayer room and medical centre, but new rivals are getting in on the game. “Imagine over 5,000,000 customers with great purchasing power are waiting for Dandy Mega Mall to open within 30 minutes radius from the center's location,” said another mall on its Web site, which promises a “5-star luxury boutique motel”. With an overwhelmingly young middle class, the Arab world's most populous country has a thriving eating-out culture, with new food courts and mall coffee-shops buzzing with customers. “Outings and gatherings are always surrounded with food. My friends and I mainly meet in cafes, and that's why you find cafes opening up everywhere,” said student Mohamed Nabil, 22. Statistics from state-run CAPMAS agency say Egyptians spend 43 percent of their incomes on food and beverages. Beltone consumer goods analyst Kamal Khedr said the sector is especially attractive during an economic downturn. Egypt's only initial public offering since early 2008 was carried out by dairy and juice maker Juhayna Food Industries, which was oversubscribed 6.8 times. EFG-Hermes economist Mohamed Abu Basha said private consumption will represent almost three quarters of Egypt's GDP this year and was the main reason the economy grew 4.7 percent in 2008-9 even while the global economy was in turmoil. “We ... are selling Egypt as a domestic demand player. Given lower global growth, everyone is looking at resilient countries,” he said. EFG-Hermes forecast that foreign direct investment would rise to $8 billion in the 2010-11 fiscal year, close to pre-crisis levels, up from $6.8 billion in 2009-10. Analysts say Swedish firm Electrolux's 2.7 billion Egyptian pound deal to buy Egyptian appliance maker Olympic Group in October showed a growing a foreign desire to tap Egypt's consumer market.
