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Nissan shuts Egyptian plant, Moody's cuts rating

Nissan shuts Egyptian plant, Moody's cuts rating
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Japan’s Nissan said it has closed its factory in Egypt for at least a week because of the anti-government protests there. The plant, which assembles mostly four-wheel-drive vehicles, is in Giza, near Cairo.

Because of the unrest a number of Japanese firms, have postponed business trips by their employees to Egypt, as well as Jordan and Yemen following advisaries from Japan’s foreign ministry.

Nissan has four Japanese employees in Egypt, and the company has directed them to stay at hotels outside Cairo for their safety. Several foreign governments, including Japan, have been evacuating their nationals.

Japan’s second-biggest carmaker produced just 10,043 units in the business year that ended in March 2010, Nissan spokesman Toshitake Inoshita said.

That is a fraction of its total output of 3.28 million vehicles in that fiscal year.

The unrest also caused Moody’s Investors Service to cut its rating on Egypt’s sovereign debt, saying the government might damage its already weak finances by increasing social spending to calm protests.

“There is a strong possibility that fiscal policy will be loosened as part of the government’s efforts to contain discontent,” Moody’s said as it announced the one-notch downgrade, to Ba2 with a negative outlook from Ba1.

“A background of rising inflationary pressures further complicates fiscal policy by threatening to increase the high level of budgetary expenditure on wages and subsidies.”

President Mubarak, who sacked his inner circle of ministers on Saturday, ordered his new cabinet on Sunday to preserve subsidies, control inflation and provide more jobs, state television reported.

The protest movement is driven in large part by public anger at rising prices, unemployment and the huge disparity between rich and poor.

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