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Political, Economic Scene Reflects Negatively On Egyptian Economy

A transitional government with no clear vision does not encourage investors while violence deters tourists from going to Egypt. Experts say repeated strikes in recent weeks from university professors to taxi drivers represent a growing political risk compounded by the absence of a government's plan to face social discontent and a growing budget deficit.

Standard and Poor's has recently downgraded Egypt's sovereign debt. Foreign currency reserves have declined by one-third in the first eight months of the year and the budget deficit has reached 9.5% of the gross domestic product. Economic growth has also declined from an average of 5-7% annually in the past five years to 2-3% in the current year.

The tourism sector has sustained losses of $3 billion while the Egyptian bourse has declined by 40%. Egypt is also witnessing rising Islamist forces while secular forces appear to be on retreat.

Source: Al-Sharq Al-Awsat, London, October 24, 2011

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