On the Egyptian Economy

In the aftermath of the events surrounding the writing, protesting, voting, and passage of Egypt's new constitution, the Egyptian economy has once again taken center stage.  And the news, it seems, just keeps getting worse.

Now, I will warn you up front that, as a law student, I'm no economist.  In the field of economics, I know the supply and demand curve and that magic little point right where the lines intersect that's supposed to be the optimal level of production.  The rest is so much voodoo floating far, far over my head.  Which is why this post isn't focusing too much on analysis, put on providing information I've read in the news . . .

First, it's been well established that the Egyptian economy - which, according to those magical economists, was never exceptionally strong - took a major hit in the aftermath of the 25 January Revolution.  Political turmoil is never good for business, and Egypt was no exception: for instance, the country's foreign international reserves have fallen from $36 billion in December 2010 to $15 billion earlier this month.  As the Wall Street Journal writes, this is "barely enough to cover three months of imports—the minimum the IMF recommends for its members."

Within the last couples weeks/couple days, Egypt's economy suffered several new blows:

• Early December 2012: the political strife engendered by the drafting of Egypt's constitution and the politicking, popular protesting, and campaigning that characterized the couple weeks between its drafting and the constitutional referendum on December 15/22 resulted in the postponement of negotiations for a $4.8 billion loan from the International Monetary Fund (IMF).  This unrest also caused President Morsi and the Egyptian government to cancel proposed austerity measures and tax increases.
• December 23, 2012: Standard & Poors' (S&P) cut Egypt's long-term sovereign rating from a "B" to a "B-" (while leaving the country's short-term rating at a "B" for both foreign and local currency debt).  Additionally, S&P "kept its negative outlook on the rating - suggesting it sees another cut as the most likely next move."

And now, today, another bit of bad news: the Egyptian pound has fallen to an eight-year low against the U.S. dollar.

Again, I'm no economist.  So for an analysis of these economic indicators and their potential effects on Egypt's citizens, the economies of other Middle Eastern countries, etc. you should probably ask someone who understands all of this significantly better than I do.  That said, here are some more links on the Egyptian economy that you may find useful:

• Morsi's Next Move: Egypt's President Got His Constitution, but Can He Fix the Economy? (Time World)
• "Guide to the End of the World (Or, Explainer on Currency Devaluation)" re: Egypt (Rebel Economy)
• Egypt Not on the Verge of Bankruptcy, Says PM (Egypt Independent)
• Egypt Reserves Plunge as Economic Crisis Bites (Reuters)
• Egypt's Economy: The Downside to Growth (Foreign Policy) (NOTE: this article is about the Egyptian economy more generally, and offers some historical context for what is currently going on; it is also several weeks old)