Deserting tourists hit Egypt's economy

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Deserting tourists hit Egypt's economy

Deserting tourists hit Egypt's economy
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For how long can the Egyptian economy keep going without tourists? The Giza pyramids have been desperately deserted for almost three weeks, since soon after the demonstrations began.

Souvenir traders are feeling the pinch. “European tourists are worried about coming to countries in conflict. The tourism sector is hardest hit because of these protests or demonstrations,” said shop owner Khair Abu Arab.

Tourism is a pillar of the Egyptian economy. This precious source of revenue is estimated at between five and 11 percent of the Arab country’s GDP. Analysts do not expect the losses to be recovered quickly.

A month before the eruption of the massive demonstrations against Hosni Mubarak, experts predicted Egypt’s growth would be second only to Qatar in the region.

Forecasts have since been revised downwards: from the 5.4 percent originally anticipated this year, analysts now foresee growth of only 1-2 percent.

Lower consumption, a drop in foreign investment and rising unemployment are also expected to hurt economic performance.

The value of the Egyptian economy in 2010 has been estimated at 160 billion euros, half that of the oil giant Saudi Arabia. Apart from tourism it depends on proceeds from the Suez Canal, Egyptian expatriates sending money to family at home, and foreign investment.

Regardless of the troubles, the Egyptian economy is faced with enormous challenges.

Two-thirds of the population are under 30, an age group that accounts for 90 percent of the country’s jobless.

The official unemployment rate of 10 percent is thought to be much higher in reality. Inflation is creeping along at 10 percent; the minimum wage is 50 euros a month.

Most serious is poverty: 40 percent of Egypt’s population of 85 million live on less than 1.5 euros a day. Meanwhile a small number of well-placed individuals have grown extremely rich.

Encouraged by the impact of the protests against Mubarak, several thousand workers from public sector companies in the Suez Canal area went on strike calling for better working conditions.

The Canal is a barometer of world trade, business along it slipped by 1.6 percent in January compared to December. Even so, the uprising is not expected to have seriously affected shipping via the canal.