News / Middle East

Egyptian Turmoil Generates Wide Economic Effect

An Egyptian protester chant anti-government slogans, as another holds a sign in Arabic reading 'Voice of the People, no to Mubarak,' as smoke billows from the National Council for Women and Children's building, in downtown Cairo, January 29, 2011
An Egyptian protester chant anti-government slogans, as another holds a sign in Arabic reading 'Voice of the People, no to Mubarak,' as smoke billows from the National Council for Women and Children's building, in downtown Cairo, January 29, 2011

The widespread Egyptian street protests against President Hosni Mubarak are having an immediate impact on the country's economy as well as worrying investors around the world.

On Saturday, some travel agencies postponed departures for Egypt, where tourism accounts for 5 percent of the country's economy. In addition, a wide group of governments, including the United States, Japan and several in Europe advised their citizens against traveling to Egypt because of the uncertainty in the capital, Cairo, and elsewhere.

Hundreds of people crowded into Cairo's airport looking for flights out of Egypt, but Western carriers canceled many of them. One British airline turned around a Cairo-bound flight in midair and returned to London.

In Saudi Arabia, stock prices retreated the most since May, with the Tadawul All Share Index plunging 6.4 percent in Saturday trading. All but one of the 146 stocks included in the index fell as investors sold shares in the face of the Egyptian uncertainty. The Saudi stock retreat followed widespread selloffs Friday at exchanges throughout Asia, Europe and the U.S. that analysts said were keyed to the Egyptian unrest.

Some financial analysts said the full economic impact of the political protests is unknown, but could sharply affect the country's oil, gas and telecommunications industries. The Egyptian government cut off Internet and mobile telephone service in the country on Friday, but two cell phone operators restored service on Saturday.

Egypt controls the Suez Canal and world shipping and energy supplies could be sharply affected if use of the canal is disrupted. More than 35,000 ships pass through the Suez annually, with 2,700 of them crude oil tankers.

Already, shares in tanker companies surged on Friday on fears of a Suez shutdown. If that were to happen, many ships would have to make more costly trips around the southern tip Africa to reach their destinations, yielding more revenue for the shipping interests.

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