Egypt turmoil costs economy $1 bn in 9 days
Egypt’s vice-president, Omar Suleiman has warned protesters that rioting is chasing away foreign tourists and investors who are vital for the country’s economy.business Updated: Feb 04, 2011 23:05 IST
Egypt’s vice-president, Omar Suleiman has warned protesters that rioting is chasing away foreign tourists and investors who are vital for the country’s economy.
The country had lost at least $1 billion in tourism in the past nine days and that a million tourists had left during the turmoil.
Tui Travel, Europe’s biggest travel company, warned the unrest in Egypt and Tunisia would cost it up to £30 million as customers cancelled or rescheduled holidays. Tui has cancelled all holiday bookings for Egypt from Germany, France, Belgium, the Netherlands and Scandinavia, but is still running holidays booked in the UK for Red Sea resorts such as Sharm el-Sheikh “in line with government advice”. This means that, at present, UK customers will not get a refund if they cancel their trip.
“If we are not able to operate any further holidays to Egypt for the rest of the winter from any source market except for the UK, we estimate the second-quarter impact will be approximately £20 million. If the UK government advice changes and we can no longer operate from that source market we would expect the impact to increase by approximately £5 million,” Tui said.
Egypt’s revenues are driven by tourism, which are thought to bring in around £7 billion a year. Taxes on ships using the Suez canal generated £6 billion in the last fiscal year. But Egypt still ran a current account deficit of £505 million in the third quarter of 2010 and had to borrow to cover the difference.
Ratings agencies have downgraded Egypt and many western businesses have shut their operations and pulled out senior staff. The country’s ports have seen much of their business move to Malta, Israel and other Mediterranean destinations as Egypt’s docks remain largely shut down.
The Suez canal, which carries about 8% of global sea trade, has stayed open despite the chaos, with armed guards protecting the waterway that links the Red Sea and the Mediterranean. But ships have avoided Port Said and Alexandria.