The Egyptian Economy: Facing the Unknown
Heather Murdock | Cairo, Egypt February 16, 2011
As Egypt works to replace the government of President Hosni Mubarak, the country’s financial future is still far from certain. Many Egyptians are confident that a new government will usher in a more efficient and equitable economy. With the country still in turmoil, though, the economic recovery could be as unpredictable as the political future.
Five days after popular protests forced the resignation of Mubarak, many Egyptians are still euphoric from what is seen as the people’s victory. Their future is unknown, they say, but it will have to be better than what they had before.
With the stock market and banks closed, labor strikes unresolved, and some foreign businesses and tourists still avoiding Egypt, however, analysts fear that life could become harder before it becomes easier.
Shops near Tahrir Square, the epicenter of the protest movement, re-opened this week. Many workers said their losses were a small sacrifice compared to what the country gained. Bakr Mohamed El Sayed sells pyramid statues, replicas of the Sphinx and other gifts near the square. He said 18 days without business left him broke, but he always has supported the protests. He thinks a new, free Egypt will draw more shoppers and foreign investors than ever before.
"I don’t have business. I don’t have business. I don’t have money. I don’t have anything, but I wanted to change the system. I wanted to change the president," said Bakr Mohamed El Sayed.
Other workers are more skeptical about the future. The public sector was thrown into upheaval last week, and many say they don’t want their rights to be forgotten behind the louder voice of the youth movement that spearheaded the revolution. On Monday, protests broke out across the country against employers in industries from textiles to media.
In Cairo, angry transit workers gathered by the hundreds, demanding higher salaries and better working conditions. Police officers marched from Tahrir Square to the Ministry of the Interior, chanting, "We are all Egyptian," and accusing the minister of corruption and violence, while other protesters followed along accusing the officers of brutality and torture. Smaller protests broke out near the opera house, and about 20 employees stood outside a movie theater for a short time, demanding higher wages.
Outside the Interior Ministry, police say their department’s reputation for brutality is a result of the leadership, and not the fault of the men on the street. Many say they still make less than $100 a month after 10 years in service.
Officer Hassan Darwish said police officers could better serve the public if they had limits to their working hours and were paid better salaries. Since the revolution, he added, policemen can finally say what they want.
With the continuing turmoil, the Egyptian stock exchange and banks say they cannot re-open, and foreign investors and tourists continue to stay away. A French bank estimated that at the height of the revolution, Egypt’s economy lost more than $300 million a day.
Predictions for the country’s economic growth also have dropped substantially - to about 3.4 percent this year from previous forecasts of 6 percent.
Foreign Minister Ahmed Aboul Gheit has called for help from the international community, saying Egypt has been hurt by the political crisis”
Analysts say it would have been impossible for Egypt's governing system to collapse without a massive economic fallout.
Marcus Marktanner, an economist at the American University in Beirut whose research focuses on the role of the state in economic development, said any new Egyptian government must address problems, including wide-scale inefficiency. He noted that reducing government waste also will mean increased unemployment. Marktanner said before Egypt can recover, it will have to weather a period of greater hardship.
"You basically have to tear down a house and build another one, so of course the bigger the house was that you tore down, the more people will suffer from it," said Marktanner.
Many Egyptians say, though, that the risks associated with political and economic change will be worth it in the end. They blame much of the widespread poverty in Egypt on government corruption, and say that without leaders stealing from the people, Egypt will prosper like it never has before.
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