First Free Story (1 of 3)Join Skift Pro
Violence across Egypt that has left hundreds dead and turned its city streets into war zones forced multinational businesses to close on Thursday and raised fears two years of economic crisis would quickly get worse.
Egypt has been struggling with a damaged tourist industry, surging food prices and high unemployment since the overthrow of Hosni Mubarak in 2011, and is only just recovering from months of strikes by public and private sector workers.
On Thursday, Swedish home appliances maker Electrolux halted production at several factories on the outskirts of Cairo where it employs 7,000 people. It said it will review its decision on Saturday.
General Motors closed its assembly plant outside Cairo and shut its office there, and oil major Royal Dutch/Shell shut its offices for the next few days and restricted business travel. BP said oil production was not affected.
The stock exchange was shut and said it would open again next week while the central bank told all banks to stay closed. Shipping sources said the Suez Canal and its ports were operating normally.
Industry representatives from Turkey, an important economic force in the Middle East, said others were likely to follow the lead of foods group Yildiz Holding, which employs 910 people in Egypt.
“We decided to halt production in Egypt after the state of emergency announcement on Wednesday to protect our staff,” Yildez chairman Murat Ulker said.
Most large Egyptian companies said they were running as normal, although staff at several Orascom offices were working from home until Sunday. A spokesman at Ezz Steel said its head office in Cairo was closed until Sunday but all plants were running as usual.
Egypt’s economy was growing at about 7 percent a year for several years before the 2011 uprising, but even that was barely enough to produce work for the large number of youths entering the job market. It expanded by just 2 percent in the year after Mubarak was toppled and 2.3 percent over the 9 months to March.
More than 4,500 factories have shut, swelling by hundreds of thousands the ranks of unemployed in a nation where two-fifths of people live on or around the poverty line. The official unemployment rate is about 13 percent but private analysts believe the actual rate is much higher.
Tourism, a major source of foreign currency and provider of jobs for millions of Egyptians, took another blow on Thursday.
A TUI spokesman said that while Red Sea resorts, including Sharm El Sheik, were unaffected by the unrest, customers had clearly been frightened away. Demand had dropped in the last four weeks and bookings were below the prior year, he said.
Both TUI Travel and Thomas Cook had already halted excursions to Cairo, Luxor and stopped offering Nile cruises since the unrest first broke out last month.
Reporting by EMEA Bureaux and Tom Finn in Cairo. Writing by Louise Ireland. Editing by Patrick Graham.
Copyright (2013) Thomson Reuters. Click for restrictions