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CAIRO

The Egyptian economy may post its slowest annual growth in half a decade this fiscal year as the global crisis hits revenue from tourism, the Suez Canal and investment, a Reuters poll found.

Ten economists in a poll from November 10 to 18 forecast Egyptian gross domestic product (GDP) growth at a median of 5.25 per cent, down from 7.2pc a year earlier. Forecasts ranged from 5pc to 6.6pc . The fiscal year began on July 1.

All economists said their forecasts have been revised down sharply to reflect the impact of the worst global financial crisis in 80 years on the most populous Arab country.

"Investment will be hit and also export growth is going to be much weaker. Europe still accounts for some 60pc of Egyptian exports and we forecast that the euro area will contract next year," said Economist Intelligence Unit senior Middle East and North Africa analyst Ania Thiemann.

"This is going to have an impact on Egyptian growth," she said, adding that she has revised her GDP growth forecast to 5.6 from 6.7pc.

Thiemann and a number of other analysts, however, said a flexible exchange rate, sliding global commodity prices and a strong net foreign asset position may help cushion the impact of slower growth.

Buoyed by rising foreign investment and record revenues from tourism and the Suez Canal, the Egyptian economy had grown at its fastest pace in decade since the appointment of a market-oriented government in 2004.

But growth began to slow in the last quarter of the 2007/08 fiscal year, with high food prices sending the rate of inflation to more than 20pc, hitting private consumption in the most populous Arab country. Egypt's stock market index has tumbled about 60pc this year.

Official estimates show that growth slowed in the first quarter of the 2008/09 fiscal year to an annualised rate of 5.8pc, Economic Development Minister Osman Mohamed Osman said.

The government has maintained a growth target of between six and 7pc in the current fiscal year, saying it would be content to attract around $10 billion of foreign investment.

Several economists said they expected the government to increase spending to stimulate the economy. This, coupled with the expected drop in revenues, including those from taxes, would lead to a bigger budget deficit.