The Egyptian business community is bracing itself for more economic hardship in the event of an attack against Iraq. Mona El-Fiqi reports If Iraq is hit, the Egyptian economy is expected to suffer, experts predict. The sectors that are foreseen to face a slowdown are the Suez Canal, tourism, exports and the stock market. A rise in prices of all imported and locally produced goods is also probable, economists believe. The Federation of Egyptian Industries (FEI) held a recent meeting to discuss the results of a study it has prepared on the negative impact of the impending war against Iraq on the Egyptian economy. According to a study conducted by the FEI the deficit in a number of items in Egypt's balance of payments, believed to be the mostly hit if Iraq is attacked, will reach $3.7 billion compared to only $1.8 billion during the fiscal year 2001- 2002. The government should be prepared to protect the Egyptian pound from devaluation against foreign currencies, FEI members said. The FEI also recommended that the government follow a policy of imports rationing to ease the pressure on the balance of payments. Suez Canal revenues are expected to fall from $1.8 billion in fiscal year 2001/ 2002 to $1 billion in fiscal 2002/2003. Assuming that the war is short, ending within three months, tourism revenues are expected to be halved to $1.7 billion in fiscal 2002/2003, the study said. Moreover, Egyptian expatriates' remittances are expected to dive to $2 billion this year from $2.9 billion last year. Due to an existing 10 to 15 per cent increase in shipment and insurance expenses and foreign exchange rate increases, the FEI predicts that Egypt's import bill will rise from $9 billion in 2001/2002 to $9.3 billion in 2002/2003, and the total value of exports, including oil products, will decrease from $6.2 billion to $5.9 billion during the same period. Meanwhile, the FEI study said, FDI will come to a complete halt, and current investments of $0.3 billion will be lost. Economist Hamdi Abdel- Azeem, deputy chairman of El-Sadat Academy for Administrative Sciences, said that the attack could lead to the return of an estimated 200,000 Egyptian workers from Iraq, resulting in a social, as well as an economic crisis. Abdel-Azeem fears that an increase in imports will result in a rise in the inflation rate from the current 4.5 to 6.5 per cent. An attack also threatens to put an end to a sizeable trade exchange between Egyptian businesses and Iraq under the "Oil for Food" programme. Egypt is one of the top five countries out of 75 others dealing with Iraq under the agreement. Last week, an unofficial Egyptian delegation that included businessmen, doctors, journalists and members of parliament visited Baghdad to express solidarity with the Iraqi people. According to Abdel-Aziz Goueida, export manager at the International Group for Investment (IGI), an Egyptian company that exports foodstuffs and machinery to Iraq, Egyptian companies doing business in Iraq are trying to speed up the fulfilment of their trade obligations before the US strike. IGI was represented in last week's delegation.
