Egypt’s economy stretches to breaking point

The housewives and breadwinners stepping out of a Cairo supermarket with bags of groceries agreed on one thing. “The prices are very high,” said Sabah Fehmi, 58. “The economy has been very bad after the revolution.”

One after another, her fellow shoppers one afternoon this month in Nasr City complained about how food prices have risen since the 18-day winter uprising that toppled president Hosni Mubarak. There were other problems, too. A stockbroker said he had lost hundreds of thousands of Egyptian pounds as the market slumped. A livestock importer said his business had declined.

Like many Egyptians, these shoppers said they rejoiced when Mubarak stepped down in February. But after 11 months of de facto military rule, coupled with intermittent violence like the clashes that killed 12 people this 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 in 2011, down from 5.1 percent in 2010, according to IMF estimates. State media reported last month that the unemployment rate was at 11.9 percent, its 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 leaders will remain in power or overthrown in a “second revolution” called for by activists in November. Although parliamentary elections are underway, and presidential elections are expected by June, it remains unclear who will govern the country, what their 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,”