Egypt's Economy Feels the Squeeze of a Prolonged Ukraine Crisis
MIN READAug 1, 2022 | 21:16 GMT
A bakery worker makes a delivery to bread stands in Cairo, Egypt, on May 9, 2022. In April, Egypt introduced price controls on commercially sold bread in response to the rising price of wheat.
(Roger Anis/Getty Images)
For now, the Egyptian government's firm grip on power and plans to increase social spending will likely keep the country's deteriorating economic situation from spiraling into mass unrest. But if the fallout from the Ukraine crisis continues to deplete its finances, Cairo may eventually be forced to enact painful austerity measures, which could raise the risk of disruptive protests. Among developing countries, Egypt has been exceptionally vulnerable to the commodity price shocks resulting from Russia's ongoing war in Ukraine. On Aug. 1, Egypt's currency hit a near-record low, with the exchange rate slipping to 19 Egyptian pounds per one U.S. dollar. Overall inflation in Egypt, including food prices, decreased slightly in June from the previous month due to slightly eased food prices, but consumer prices in the country are also still higher than they were before Russian troops began invading Ukraine in February. The combined impact of high inflation and...