Egypt / The worst economic crisis since 1930s

Former finance minister and economist say Egypt is in dire predicament as foreign investment and tourism collapse

Egypt is suffering its worst economic crisis since the Great Depression, a former finance minister of the country and one of its leading economists have warned.

In terms of its devastating effect on Egypt’s poorest, the country’s current economic predicament is at its most dire since the 1930s, Galal Amin, professor of economics at the American University in Cairo, and Samir Radwan, finance minister in the months after Egypt’s 2011 uprising, said in separate interviews with the Guardian.

Since the fall of Hosni Mubarak in 2011, Egypt has experienced a drastic fall in both foreign investment and tourism revenues, followed by a 60% drop in foreign exchange reserves, a 3% drop in growth, and a rapid devaluation of the Egyptian pound. All this has led to mushrooming food prices, ballooning unemployment and a shortage of fuel and cooking gas – causing Egypt’s worst crisis, said Amin, “without fear of making a mistake, since the 30s”.

“Nobody cares about the poor now,” Amin said. During comparable crises in the late 1960s, the mid-70s and the late 80s, Amin and Radwan argued that Egypt’s poorest were variously shielded from absolute hardship either by state subsidies, overseas aid, comparatively low unemployment, or by remittances from expatriates in the Gulf states. But now one in four young Egyptians is unemployed, household remittances are low, and there is a shortage of subsidised goods.

“You are talking about nearly half of the population being in a state of poverty,” said Radwan, a development economist. “Either in absolute poverty or near-poor, meaning that with any [economic] shock, like with inflation, they will fall under the poverty line.” Currently, 25.2% of Egyptians are below the poverty line, with 23.7% hovering just above it, according to figures supplied by the Egyptian government.

Chosen excerpts by Job Market Monitor

via Egypt ‘suffering worst economic crisis since 1930s’ | World news | guardian.co.uk.

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