Revolutions don’t mix well with relaxing vacations.
Egypt’s ongoing political upheaval is costing the country $400 million a month in tourism revenues, according to estimates from JP Morgan analysts. And the spike in violence that commenced Aug. 14 when the military moved to crush camps of protestors backing ousted president Mohamed Morsi has only worsened the situation.
Last week, arrivals at Egypt’s airports dropped more than 40% compared with the previous week. Italian and German tourists are departing Red Sea resorts of Sharm el-Sheikh and Hurghada in droves, with few showing up to replace them.
Tourism accounts for 11% of Egypt’s economy and provides about 20% of its dwindling foreign currency reserves. So the downturn in the sector has real repercussions for the economy. Growth has fallen to its lowest level in three decades, according to JP Morgan analysts.
The repressive Mubarak regime provided enough stability for the economy to at least putter forward. And the messy democratic movement that brought in the dysfunctional Morsi government at least gave some hope of a democratic future, even if it meant economic disarray. The military’s violent reassertion of power, now under way, has dampened hope of both democracy and growth.