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Oh yeah, Egypt: Don't look now, but there's another crisis coming

Forget the revolution. The real problem in Egypt is the country's terrible economy.
Egypt pyramids 2011 5 25Enlarge
Egyptians ride their camels past the pyramid of Khafre in Giza, on the outskirts of Cairo, on November 30, 2010. (Patrick Baz/AFP/Getty Images)

Revolution is a tricky thing.

There's a lot of noise. Yelling in the streets. Flags wave energetically. Television news anchors descend like a pack of well-coiffed lemmings, spouting platitudes about hope and history.

And then reality sets in. Cold, hard and, yes, very depressing reality.

That's pretty much what's going on in Egypt these days, the most populous country and one of the most important economies in a very troubled Middle East. And, if you're not paying attention, you should be.

In short, Egypt's economy is a mess. And it's only getting worse.

Today's news is no real surprise: the ratings agency Standard & Poor's cut Egypt's credit rating again Thursday — the sixth such downgrade since the uprising began in 2011.

Here's the problem, neatly summarized by today's S&P's statement, and published by the Financial Times behind a paywall:

“The downgrade reflects our view that the Egyptian authorities have yet to put forward – either to the Egyptian population or the international donor community – a sustainable medium-term strategy to manage the country’s fiscal and external financing needs. As a result, we expect financing pressures to remain elevated and comprehensive donor support, including from the International Monetary Fund, to remain elusive.”

As for the IMF, it's not happy either.

The fund said Thursday that Egypt's economy is getting worse, and that it is still waiting for more information from the government before it will even resume talking about a $4.8 billion loan for Cairo.

Meanwhile, Egypt's once-bustling tourism industry — which peaked in 2010 when it made up 13 percent of the country's gross domestic product —is hardly coming to the rescue.

Here's how the Economist summed up the situation in a story this week:

"Two years of political upheaval have battered tourism, a motor of Egypt’s economy. Much of the Nile cruise fleet lies idle. Trinket-sellers and would-be guides at the Giza pyramids are so hungry for custom that they often mob or simply jump aboard approaching taxis. And though the damage has been patchy, with beach resorts still thriving even as visitors shun the ancient monuments, lingering uncertainty over the future means it may be years before Egypt regains its place in the sun."

But here's the real problem:

Egypt doesn't have time to wait for tourists to return to the wonders of Giza and Luxor.

The government of Mohamed Morsi and his cadre of Muslim Brothers are running out of options, and cash, fast.

International donors are clearly growing antsy.

And, most importantly, the people of Egypt — the same people who brought on the Tahrir Square revolution — are suffering greatly as the country's economy continues to stagnate.

This is not a recipe for stability, to say nothing of fostering economic growth and prosperity for a critically important country of more than 80 million people.

Nor is this what the people of Tahrir Square expected on those hopeful and chaotic days in Cairo more than two years ago.

As leaders throughout history have been made painfully aware, unhappy people without jobs or good economic prospects tend to gather, make noise, yell in the streets or worse.

So heads up, earth: unless Morsi and team can somehow fix the root of the problem — Egypt's troubled economy — there's another crisis headed to Cairo.

And this one will no doubt be tricky, too. For everyone involved.

http://www.globalpost.com/dispatches/globalpost-blogs/macro/oh-yeah-egypt-dont-look-now-theres-another-crisis-coming