Tuesday, February 01, 2011

Protests Not Good For The Economy

Just as strikes helped cause the contraction in the Greek economy, the current protests in Egypt is now causing a "near paralysis" in the Egyptian economy as stores and factories are closed and tourists are evacuated.  The effects in Egypt seems to be much bigger than in Greece.

While Egypt has a large population, its economy isn't that big, so the global effects won't be significant.

These protests won't last forever so the effects of them will mostly be temporary. The long term effects depends on who wins the power struggle. If Mubarak or some of his cronies manage to stay in power or if some relatively secular opposition group takes over, then there won't be any significant long term effects.

If however the Islamic hardliners in the Muslim Brotherhood takes over, then it will be a lot more troublesome. The tourism sector will suffer as Islamic hardliners are unlikely to accept scantily clad Western women or alcohol .

More troublesome for the outside world is how many in the Muslim Brotherhood advocate war against Israel, something which create a regional conflict with a heavy human and economic price.