Egypt Watch

Coronavirus implications on the economy exacerbated

The Egyptian Stock Exchange witnessed in a trading session on Sunday a sharp decline with a collective decline of all indicators. Under pressure from sales of Arab and foreign investors, the EGX 30 Index fell by 9.09 per cent, and the EGX 100 Index decreased by 6.12 per cent. Market capital losses were recorded today at EGP 39.6 billion ($2.5 billion), to close at EGP 560.2 billion ($35.6 billion). These losses are the largest since the “bloody Sunday” last September, which recorded losses of EGP 36 billion ($1.9 billion). Sources revealed the decline of more than 70 per cent of new tourist reservations to Egypt, due to the spread of the coronavirus, at a time when the epidemic will cause the revenue of the Suez Canal to decline due to the decrease in the movement of freight worldwide.

The Egyptian pound exchange rate fell against the dollar for the first time since January 2019, and the dollar rose to EGP 15.6, an increase of about 10 piasters. Uma Ramakrishnan, Head of the Egyptian Mission to IMF, said that the spread of coronavirus in conjunction with low oil and commodity prices, deteriorating demand and global supply chains, will affect the Egyptian economy and the economies of the Middle East region more broadly. The cost of exchanging credit risk for Egypt for the 5-year period rose to 512 basis points in last Friday’s trading, compared to 260 basis points in mid-February, which means that there is an 8.5 per cent possibility that Egypt will default on its debts. Abdel Fattah al-Sisi allocated EGP 100 billion from the state budget to take the necessary measures to prevent the spread of the virus in Egypt.