Crisis 'costing Egypt £200m a day'
Published 04/02/2011 | 12:42
Egypt's economy has lost at least 3.1 billion dollars (£2 billion) as a result of the political crisis in the country, investment bank Credit Agricole said, as tens of thousands of protesters massed in central Cairo demanding the president's ouster.
The unrest that began on January 25 led to the shuttering of businesses and companies, the closure of banks and the stock exchange and the exodus of thousands of tourists due to the demonstrations. The ensuing violence almost overnight drove a nation once seen as a pillar of stability to the brink of chaos.
Credit Agricole, in one of the first assessments quantifying the damage to the economy, said the crisis is costing Egypt at least 310 million dollars (£200 million) per day. The bank also revised down its forecast for 2011 GDP growth to 3.7% from 5.3% and said the Egyptian pound could see a depreciation of up to 20%.
The losses are the tip of the iceberg of Egypt's economic woes.
Any post-crisis government will face major challenges in rebuilding the country's image and dealing with a range of fundamental economic problems that are sure to be exacerbated by the unrest.
"The economy is at the heart of Egypt's problems," John Sfakianakis, chief economist at the Riyadh-based Banque Saudi Fransi-Credit Agricole Group, said in the report.
Egypt's GDP grew by about 7% for three years, before the global meltdown cooled the economy to a still respectable 4.7% in 2009.
Still, Egypt faced major obstacles that have helped fuel, if not spark, the popular uprising.
Poverty is rampant, with about 40% of its 80 million people living on or below the 2 dollars per-day poverty benchmark set by the World Bank. Unemployment is officially pegged at around 10%, but believed to be more than double that - particularly among the youth. Food inflation has hovered at about 17% per year, raising the cost of living for millions.
The disruption to daily life stemming from the protests has only exacerbated those issues. The vital tourism sector, which accounted for 6% of GDP in 2010, could "easily retreat" to pre-2004 levels of under 5.6 billion dollars, said Mr Sfakianakis, adding that the "shortfall in tourism receipts will have to be addressed by additional budgetary support".