This article is written by Engineer Ghada Mohamed a Chevening scholar. The views expressed here are personal and do not necessarily represent the views of the British Government.
According to international financial and economic crisis, the financial markets and the world economy continue to face serious global challenges and the severity of the crisis and ongoing uncertainties demonstrate the need for urgent action to restore worldwide financial stability, lead the international economic recovery and secure a sustainable future for all countries. The Egyptian economy may post its slowest annual growth in half a decade this fiscal year as the global crisis hits revenue from tourism, the Suez Canal and investment. 'Investment will be hit and also export growth is going to be much weaker.
For example, Europe still accounts for some 60% of Egyptian exports and we forecast that the euro area will contract next year,' said Economist Intelligence Unit senior Middle East and North Africa analyst Ania Thiemann. ‘The Central Bank of Egypt has taken necessary measures to diversify the currency basket and set an maximum limit to foreign deposits, which are meant to lessen the impact of the international markets, but the Egyptian banking sector suffered slight losses but the capital market was influenced in the global crisis as some Egyptian companies were involved in foreign investments’ said Egyptian media. Meanwhile, the Egyptian stock market witnessed unprecedented steep losses this month with its key index plummeted more than 16 percent on Oct. 7 amid concerns about the prolonged U.S. credit crisis, hitting a two-year low.
The global credit crunch is expected to have a severe impact on tourism figures in countries where it is a large part of the economy. Countries like Egypt, which are weathering the financial storm fairly well are, however, likely to find an effect as people cut back on holidays. This in turn will have an effect on property rental yields in the sector. The current financial crisis is taking the whole world in its grip, including Europe, a major source of tourists for Egypt. Economic crisis has constricted the disposable income of Europeans, and thus, they are staying away from leisure activities like tourism. And Egypt is feeling the heat of this crisis.
It is expected that the country will see a decline of around 10 to 15% in reservations for this Christmas against last Christmas. Egypt’s Tourism Promotion Authority (TPA) is planning a series of events to contain the impact of the global financial meltdown on the tourism sector.