Egyptian Prime Minister Hisham Qandil (right) give a joint press conference with International Monetary Fund chief Christine Lagarde on Aug. 22, 2012, upon her arrival in Cairo for talks on the Egyptian government's plans to reform and relaunch the national economy. (-/AFP/GETTY IMAGES)

CAIRO — You couldn’t call it giddy optimism. But, in recent weeks Egypt has experienced a palpable mood swing, resulting in increased consumer and investor confidence, according to those in business, shopkeepers and political observers.

The commercial districts and shopping malls of Cairo are bustling and businesses say that shoppers spending more. The stock market is enjoying a boom, up 37 percent since the uncertainty surrounding presidential elections in June that propelled the Islamist Mohamed Morsi to the presidency.

A technical team from the International Monetary Fund is due in Cairo this month to negotiate a proposed $4.8 billion loan package and a large U.S. delegation, including six trade officials and representatives of dozens of U.S. multinationals, will arrive on Saturday to drum up business.

White House and state department officials are due to meet Hisham Qandil, the prime minister, during the visit, which comes just days after the U.S. said that it had sped up plans to provide Egypt with $1 billion in debt relief.

On Thursday, Qandil said Qatar had also agreed to invest $18 billion in Egypt during the next five years to boost the country’s economy.

“I think there are many factors causing the good mood we are in now,” said Ashraf Abdel Aziz, head of institutional trading at Arabeya Online, a Cairo stock brokerage. “We have a president, finally. There are fresh acquisitions and rumours of acquisitions. There’s the [possible] agreement with the International Monetary Fund.”

Observers caution, however, that the economy continues to tread water. The government has yet to implement any of the structural reforms that would change Egypt’s fiscal juggling act.

Capital flight and drops in tourism and foreign investment in the wake of last year’s revolution continue to drain foreign currency reserves, which have dropped to $15.1 billion, compared to $35 billion before the uprising began. Government spending outstrips revenues and the Egyptian pound continues to slip.

The IMF predicts that real gross domestic product will grow only 1.5 percent in 2012, compared with 1.8 percent in 2011, and 5.1 percent in 2010.

Consumer spending drives much of Egypt’s economy. The revolution and its turbulent aftermath caused many people to postpone making large purchases. Many analysts and business people anticipate a quick release of pent-up demand giving the economy a boost, although they say the fundamentals will not improve until foreign investment and tourism return.

So far, analysts say, renewed optimism has boosted only essential sectors, including foods and beverages, retail sales, health care and education.

“I can see signs of growth in those areas, and I’m optimistic about internal growth,” said Ian Marsh, chairman of Think Egypt, a Cairo investment consultancy. “But I’m not optimistic about FDI. The country is on very dangerous financial ground. I’m not overly positive, and I wouldn’t be foolish enough to tell you when it’s going to get better.”

However, non-essential sectors have seen some improvement. Advertising, for example, which had gone down sharply since the revolution, is showing signs of life.

“Even if companies had a product they believed in, they were scared to market it,” said Ahdab Mohamed, the manager of a small Cairo advertising firm. “Who will look at a Coca Cola ad, for instance, when there is gunfire and armoured vehicles on television? So, I can definitely say that now that the general scene has calmed down there has been an increase in companies’ interest.”

The improvement in business sentiment has been helped by the relative calm in the country since Morsi has taken office. Large demonstrations and bloody confrontations between the security forces and protesters have ended, there are more police on the streets and even his opponents say the president has tried to ease fears about his Islamist agenda.

“He has at least tried to appear to be reasonable and tried reach out to people,” said Wael Nawara, a political activist and co-founder of the secular Ghad party.

Opinion polls seem to reflect the mood shift. A survey published on Monday by al-Masry al-Youm newspaper found that 77 percent of Egyptians approve of the country’s course and 60 percent said they would vote for Morsi, up from the 52 per cent who voted for him in the elections.

Still, experts warn that without more substantial signs of progress on the economy and security, optimism will be short-lived. Mohamed Hussein Khalafallah, owner of an appliance store, said he had noticed shoppers spending more in the past month, but readily admits his and his customers’ optimism is based on feeling rather than hard fact.

“I just feel more comfortable and I feel like people come into my store are feeling more comfortable and they are buying the more expensive items,” he said.

“I feel like the streets are secure again. And when the streets are secure I am not afraid to open my store. And my customers can buy a big TV without being scared of having it robbed from them the moment they step outside.”

— Financial Times