The rating agencies make no sense: after Moody's Standard and Poor's has lowered coldly, Tuesday 1 February, the Egyptian debt rating. Historic or not, the popular revolt is not good for business, the agency said: "From our point of view, political instability and unrest will slow economic growth in Egypt and affect public finances.
" In struggle for full democracy, the financial analysis may seem cynical, but the risks are very real for the Egyptian economy. No need for economic analysis to show the impact of the movement in the short term. In Cairo, the epicenter of the dispute, and in several major cities, most shops and banks are closed since Sunday.
Distributors, empty, no longer issue tickets that are used for everyday purchases but also, in a country where many species are used to pay employees. And, of course, the flow of tourists was brutally interrupted. In a country where tourism accounts for 11% of GDP, their desertion can not be taken lightly.
However, the pyramids of Giza will not move anytime soon, and it's a safe bet that their fans will come back as soon as they no longer fear for their safety. And the country has other resources. "Egypt has a relatively diversified economy compared to the region. There is a large manufacturing industry in the production of textiles, automotive equipment, fertilizer.
And the field of IT outsourcing is booming, "says Ania Thiemann, senior economist at the OECD (Organization for Economic Cooperation and Development) and coordinator of a major organization in the country. If several groups have repatriated their foreign employees and closed some plants, the activity will resume once the dust settles.
For specialists, the real risks come from elsewhere. First of them, galloping inflation that has hit the poorest. Egypt, world's largest importer of wheat has been hit hard by soaring commodity prices. From 11% for all consumer prices, inflation reached 20% for food . A dramatic rise in prices for the Egyptian population, which spends between 40 and 60% of its income on food.
"About 20% of the population lives below the poverty line, and another 20% just above" says Ania Thiemann. "These last 20% threaten to fall below the threshold when food prices are soaring. Today, [people] survive because they can buy certain commodities such as bread, which are subsidized.
"Recognizing this critical point, this weekend, Hosni Mubarak promised to the people to" increase the living standards, expand services and support the poor. "To Ania Thiemann, the solution envisaged by the government is not in doubt:" It seems fairly clear from Mubarak's speech that the state will increase subsidies.
"But the cure could be worse than the disease, increasing inflationary pressure. Besides he would have a disastrous effect on public finances, patiently cleaned up in recent years. In this regard, the announced departure of Youssef Boutros Ghali, Minister of Finance since 2004, with the former government sacked at the weekend, worried the international observers.
The Economist, well known and respected by the international community, is causing major economic reforms in the country past five years. Thanks to them, including the country can count on a strong banking sector, able to cope in the event of massive capital flight. With a growth of around 5% over the last two years the country has withstood the crisis and has implemented significant reforms that have supported economic development.
But the poorest, left in poverty, have not really benefited. "The government has belatedly realized that economic reforms should go hand in hand with social reforms, access to education and health in particular," said economist of the OECD. Today, she is concerned that these reforms never see the day.
"The risk is that Egypt retrograde in its reform program and return to a centralized economy, with a role of the state very hard," said Ania Thiemann. Marion Solletty 
" In struggle for full democracy, the financial analysis may seem cynical, but the risks are very real for the Egyptian economy. No need for economic analysis to show the impact of the movement in the short term. In Cairo, the epicenter of the dispute, and in several major cities, most shops and banks are closed since Sunday.
Distributors, empty, no longer issue tickets that are used for everyday purchases but also, in a country where many species are used to pay employees. And, of course, the flow of tourists was brutally interrupted. In a country where tourism accounts for 11% of GDP, their desertion can not be taken lightly.
However, the pyramids of Giza will not move anytime soon, and it's a safe bet that their fans will come back as soon as they no longer fear for their safety. And the country has other resources. "Egypt has a relatively diversified economy compared to the region. There is a large manufacturing industry in the production of textiles, automotive equipment, fertilizer.
And the field of IT outsourcing is booming, "says Ania Thiemann, senior economist at the OECD (Organization for Economic Cooperation and Development) and coordinator of a major organization in the country. If several groups have repatriated their foreign employees and closed some plants, the activity will resume once the dust settles.
For specialists, the real risks come from elsewhere. First of them, galloping inflation that has hit the poorest. Egypt, world's largest importer of wheat has been hit hard by soaring commodity prices. From 11% for all consumer prices, inflation reached 20% for food . A dramatic rise in prices for the Egyptian population, which spends between 40 and 60% of its income on food.
"About 20% of the population lives below the poverty line, and another 20% just above" says Ania Thiemann. "These last 20% threaten to fall below the threshold when food prices are soaring. Today, [people] survive because they can buy certain commodities such as bread, which are subsidized.
"Recognizing this critical point, this weekend, Hosni Mubarak promised to the people to" increase the living standards, expand services and support the poor. "To Ania Thiemann, the solution envisaged by the government is not in doubt:" It seems fairly clear from Mubarak's speech that the state will increase subsidies.
"But the cure could be worse than the disease, increasing inflationary pressure. Besides he would have a disastrous effect on public finances, patiently cleaned up in recent years. In this regard, the announced departure of Youssef Boutros Ghali, Minister of Finance since 2004, with the former government sacked at the weekend, worried the international observers.
The Economist, well known and respected by the international community, is causing major economic reforms in the country past five years. Thanks to them, including the country can count on a strong banking sector, able to cope in the event of massive capital flight. With a growth of around 5% over the last two years the country has withstood the crisis and has implemented significant reforms that have supported economic development.
But the poorest, left in poverty, have not really benefited. "The government has belatedly realized that economic reforms should go hand in hand with social reforms, access to education and health in particular," said economist of the OECD. Today, she is concerned that these reforms never see the day.
"The risk is that Egypt retrograde in its reform program and return to a centralized economy, with a role of the state very hard," said Ania Thiemann. Marion Solletty
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