The unrest in Egypt has sparked concerns for the economic stability of markets around the world.
Egyptian economist Salah Al Desouky said his country’s economy has not been able to withstand the ongoing political turmoil. Banks are closed and production at factories has stopped. Some foreign companies are getting their employees out of Egypt, and the country’s main stock market indicator fell 17 percent just before being shut down before the weekend.
“Economic interests have been exposed to real danger,” Al Desouky said.
Egypt, a strong US ally in the Middle East, has enjoyed a fairly robust economic growth in recent years, thanks in part to tourism, but the country’s unemployment rate is unofficially estimated about over 25 percent and inflation on food prices has been about 17 percent.
“The end-game in the political crisis in Egypt remains uncertain,” investment giant Citigroup said in a research note. “The position of (Mubarak) is looking increasingly tenuous, although it is far from clear how any transfer to a new political order will proceed, and over what timeline.”
Egypt is not an oil-producing state but its Suez Canal is important for the transportation of oil out of the region. The US Energy Department estimated that about 2.9 million barrels of oil passed through the Suez Canal and the nearby Sumed oil pipeline in 2009. The price of oil is trading at about $92 per barrel.
“The most pressing concern for global markets is the potential for knock-on effects on oil flow if turmoil starts to spread from Egypt across other countries in the region,” said Jane Foley, an analyst at Rabobank International.
The “March of Millions” in Egypt has sparked the Chinese government to withhold any information about the protest arising out of the country. Egypt is not the first country to hold protest; Yemen has held protest to rid their government leadership and Algeria protesting over higher food prices.
On Monday, over 1200 Americans were vacated from the country on charter flights. Internet services remain shut-down and cell phone networks have been disrupted. With concerns over security and personnel safety, the U.S State Department ordered evacuations amid anti-government protest.