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Tomorrow, Friday, January 25, Egypt marks two years since its revolution, with President Mohammed Mursi facing two major challenges: One of a crisis of governance and national dialogue with the opposition, and another of a critical economic situation.
Before the uprising, Egypt’s GDP was growing at five percent, but it declined from four percent in the fiscal year 2010/2011 to 2.2 percent in 2011/2012.
Continued uncertainty and unrest in the last months of 2012 led to the weakening of growth in the new fiscal year at a time when inflation, which rose to 5.6 percent last December, was becoming a major threat.
The revolution cut the GDP by an estimated $4.27bn, while the cost to public finances was $5.52bn, according to estimates given by a Geopolicity study.
Unemployment is also rising fast. According to government statistics, reported by Bloomberg in February 2012, the unemployment rate rose to 12.4 percent in the last quarter of last year from 8.9 percent in the same period a year earlier, although some analysts say the current unemployment rate could be as high as 25 percent.
Foreign investment in the country was also hit hard by the unrest, with investments down to just $375m in 2011 from $6bn in 2010, according to central bank data, declining by nearly $6bn year-on-year. The lack of security also scared away investors, with the stock market losing about $8bn in October 2011.
In November 2011, Moody’s downgraded five of the country’s largest banks, saying it was reassessing Egypt’s ability to support its banking system amid the political turmoil.
The country’s foreign exchange reserves dwindled from $36bn in June 2010 to $14.4bn in July 2012, which means Egypt’s net international reserves went down 60 percent in a year. The Egyptian pound has fallen dramatically against the US dollar and it continued to decline on January 20, 2012, taking its losses to 6.6 percent — the Egyptian pound has dropped more than 12 percent since the beginning of the revolution in January 2011.
The tourism sector, a main pillar of the Egyptian economy, accounted for 11.3 percent of the country’s GDP and had a total revenue of nearly $12.5bn in 2010, which fell to $8.8bn in 2011.
According to official figures, around 9.8 million people visited Egypt in 2011, a decline of 33 percent compared with 2010, and there was an 18 percent drop in tourist nights spent in the country in 2011. Lack of security, and political instability have driven tourists away from the country in search of other destinations.
However, as they mark the second anniversary of the revolution, all Egyptians should unite and work together to move to the post-revolution period.
They should focus their forces and potential on fruitful hard work in order to achieve their goals of stability and prosperity for Egypt.