Like many Egyptians, these people said they rejoiced when Mubarak stepped down in February. But after nearly 11 months of de facto military rule coupled with intermittent violence, such as the clashes that killed 12 people this past week, and an uncertain political landscape, they are feeling the strain of an economy stretched to the breaking point.
Egypt’s economy grew at just 1.2 percent this year, down from 5.1 percent last year, according to International Monetary Fund estimates. State media last month reported that the unemployment rate was 11.9 percent, the highest in 10 years, and analysts say the true figure could be much higher.
The instability has hit the tourism industry hard, scaring visitors away from the country’s historic monuments and sunny beaches. Foreign investment has stalled as investors in energy projects, construction and other sectors wait to learn whether the military leadership will remain in power or be overthrown in a “second revolution” that activists called for last month. Although parliamentary elections are underway, and a presidential election is expected by June, it remains unclear which party will govern the country, what its economic policy will be and how much power the military will cede.
“The light at the end of the tunnel is not clear yet,” said Magda a-Sayyid Kandil of the Egyptian Center for Economic Studies. “We are still going through a period of instability.”
The economic impact of Mubarak’s resignation was initially manageable because Egypt had $36 billion in foreign currency reserves at the beginning of this year, Kandil said. But the prolonged unrest and uncertainty have caused the reserves to dwindle every month, and they are now around $20 billion, according to the Egyptian Central Bank.
That level is barely enough to cover three months of imports, Kandil said. Because the government imports most of the country’s wheat, the prospect of shortages of subsidized bread, a staple for most Egyptians, looms in the first months of 2012, she said.
The army — buoyed by $1.3 billion of funding annually from the United States — has long been an economic force in the country, with factories, supermarkets and construction companies owned and run by current and former military officials. The military rulers granted a $1 billion loan to the Central Bank last month,but some critics dismissed this as an effort to disguise their poor handling of the economy since taking over.