Opinion: Is Egypt experiencing déjà vu?

Two years and six months following the onset of the Arab firestorm, Egypt is back on the streets, its youth filling Tahrir Square.

It had ousted Hosni Mubarak, held elections and was deemed one of the “successful” “Arab Spring” countries to use the Western-centric term coined by optimistic foreign observers. The past two weeks saw a “soft coup” and a new leadership assuming power, with the promise of a referendum on yet another revised constitution and parliamentary elections promised in 2014. Will this become a déjà vu scenario?

The sense of euphoria and bright promises following the ousting of Mubarak was rapidly confronted with the reality of dismal performance. Unemployment in the past year under Mursi’s rule rocketed to 13.3%.

Eight out of every 10 jobless Egyptians are under 30, and more than a quarter of them hold university degrees or higher. Some 750,000 young Egyptians join the labour force every year. With no job creation over the past two years, one and half million joined the ranks of the frustrated unemployed.

Manufacturing output, tourism and the related services sector, investment –domestic and foreign- all plummeted. Core inflation grew to 8%, and foreign reserves fell to $14.9 billion as of May 2013, which included $11.5 billion financial assistance from Qatar, Libya, Turkey and Saudi Arabia.

The budget deficit – the reduction of which was a major point of contention in negotiations for the $4.8 billion loan from the IMF – is running at 15% of GDP, with untargeted food and fuel subsidies accounting for the bulk of the bill. The Egyptian pound fell from 6.7 against the dollar to a record 7.4 during the “Mursi” year – leading to a politically & economically damaging rise in food prices in a country that imports almost 70% of its food needs.

While Mubarak’s Egypt had been growing and economic reforms were introduced, there was little or no trickle down or ‘pull up’ effect. Growth was not inclusive and poverty was growing. The greater the degree of income and social inequality before transition, the greater the likelihood of violence and conflict to resolve those inequalities.

Mursi and an inexperienced government focused on a Muslim Brother socio-political agenda that lacked internal consensus instead of addressing long-standing and growing economic and social grievances.

The new government led by Hazim El Beblawi, a respected economist with a conscience, should aim to form an inclusive government in order to set Egypt on a path of political stability and the rule of law. It will have a short honeymoon: managing revived expectations will be a daunting task.