The Egyptian economy is largely based on tourism, finance and exports, such as oil, cotton and chemical products. A quarter of the countries economy is informal. Egypt’s public debt has increased to 80.5% of its GDP, which is a significant amount. Egypt’s GDP had been steadily growing at around 7%, yet in the quarter after the uprising the GDP was up only 0.3%, a decrease of 6.7%.
The main reason that the Egyptian economy struggled over the past year was not caused by the actual revolution itself, but rather by the post-revolution problems. After the uprising occurred, people from all sectors of life started unorganised and haphazard striking. These strikes were the key in the economic downfall. They caused many problems that led to the progressive fall of GDP.
Financially, the post-revolt meant that; people were not working; and those who were working in services and trading had nothing to do because the majority of the people were striking. This meant that Egypt’s economy was not running, as consumer spending was reducing. In addition many people were not paid for months on end meaning that they struggled just to make ends meet. Many businesses were forced to close down, as they were not getting any trade.
What is worse is that investors have seized putting money in Egypt due to the increasing uncertainty of the political direction in which Egypt follow. Therefore, the countries economic growth appeared to be very slow. During the time of the revolution the stock market closed and struggled to gain momentum again.
Over the past couple of decades the Egyptian economy has been dominated by tourism. With a large array of places to visit, it is easy to see why more than 11 million people visit the country each year. It is a major part of the country’s source of income and receives huge financial investment from the government. The uprising and violence that spread around the country has frightened many people from visiting the country. They are unsure about Egypt’s volatile situation with strikes occurring frequently, with people fearing about their security. In Sharm-El-Sheikh, Egypt’s tourist hotspot, hotel bookings are down to 32% from 75% and it is estimated that Egypt’s tourism is loosing $25 million per day due to this.
Egyptian exports have also decreased by 6% due to the revolution. The country is still producing its main exports, cotton and oil, however, the production rates have decreased due to fewer workers. Also, during the 18-day revolution the trade markets where all closed as many companies shut doors.
It is clear to all that the revolution has produced good outcomes, in that a dictator was toppled from power. Nevertheless, many do not realise the turmoil that has followed and the struggle that the country is currently in. High inflation levels and wage cuts have meant that people are struggling to survive. Egypt’s economy has significantly shrunk along with tourism revenues and exports. Nonetheless, it is expected once Egyptians elect their president and start to settle down, they will be able to turn things round especially that Egypt has three quarters of the world’s ancient treasures.
Contributed by Ahmad Yousef
Editor’s comment: The Muslim Brotherhood has now risen to power and it will be interesting to see how the Greek economy progresses, as well as the medium-to-long term reaction of the international community to the new president.