SomaliPress.com

Egypt's Unrest Hurts Economy

Published on Monday 31st January 2011

The economic impact of Egypt's political unrest is being felt around the world, as worried investors are driving down the price of stocks and bidding up the cost of oil.Egypt's stock market and banks remain closed for a second business day. So far, the unrest has not affected Egypt's Suez Canal, which is a key route for oil and other goods around the world. But the nation's tourist industry, which provides one out of eight jobs in Egypt, is seeing thousands of customers flee the country while other potential visitors are canceling trips. Some airlines have cancelled flights, while some governments are organizing charter flights to get their citizens out of Egypt.  News reports say some foreign businesses, including a cement factory, automobile company, and beverage maker have shut operations, at least for a while, and many experts, managers, and their families are leaving the country.Commerce was further disrupted when the government shut down the Internet to keep protesters from organizing demonstrations. The action had the unintended consequence of hurting the many businesses that use the Internet to buy and sell goods. The many disruptions prompted Moody's Investor services to cut Egypt's credit rating as lenders worry it will be difficult to get loans repaid.  The lower credit rating means lenders are likely to demand higher interest rates for loans, raising the cost of refinancing existing debt and making it more difficult to get financing for future projects. Egypt's economy has been growing at a relatively strong rate in the past couple of years, but it has an inflation rate of nearly 13 percent and a jobless rate that one estimate puts at nearly 10 percent and other estimates say is higher. About 20 percent of the population is at or below the poverty level.

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