Optimism Exists for Economy in Egypt with Morsi Ouster

Analysts said they were optimistic that the ouster of Egyptian President Mohammed Morsi could present a brighter future for the economy in the country.

Stocks in the country were up by 7% Thursday on the ouster news, the largest percentage increase for one day in over 12 months.

Investors hope that the prospects in Egypt will improve under a new president, even though the battered economy in the country is in a deep crisis.

Some economic analysts said a loan that has been long stalled from the International Monetary Fund might now become available, although skepticism remained amongst others.

The opportunity brought on by the protests of last Sunday that saw Morsi removed as President, was created in part by the dire performance of Egypt’s economy during the last two years.

The Arab Spring protests that brought about the removal of Hosni Mubarak from power were not able to translate into change in the dire economy as many had hoped or thought would happen.

Instead, the last two years created more instability politically in Egypt that ensured unemployment and inflation increased, while the amount of tourist and foreign investment revenue dropped.

Debt for the government has increased from the $30 billion when Mubarak left office to today’s $40 billion. Inflation was 3% under Mubarak and is now floating between 13% and 17%. The rate of unemployment has jumped to over 13% under Morsi, a new record for Egypt.

Instability politically has made it more difficult for the central government to increase taxes on the more than 80 million living in the country.

Therefore, as the debt increased under Morsi’s government, it had to dip into the cash reserves, which are less than half today, what they were prior to Morsi taking office.

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