Egypt Abyss

In 2010, Egypt imported 40% of is food and 60% of its wheat. It is the largest importer of the latter. Egypt recognises the problem and is trying to dramatically improve wheat production but the methods employed may not be environmentally sustainable and make matters worse. At any rate, with a population growth of 1.7% the solution cannot be solved without social reforms encouraging a reduction of the birth rate towards sustainable population levels.

The problem is compounded by crop failures in the main wheat producing nations: “global wheat supply will fall in the 2012-13 season to 661m tonnes, well below consumption of 688m tonnes” (http://www.ft.com/intl/cms/s/0/7cbc024c-2998-11e2-a5ca-00144feabdc0.html) which means that Egypt must buy in a market where demand outstrips supply.

To make the storm perfect, Egypt’s deficit hit 11% of GDP in 2012 (http://www.ft.com/intl/cms/s/0/42b76560-fc29-11e1-aef9-00144feabdc0.html); higher food prices slash into Egypts foreign exchange reserve which already is droppign rapidly. Massive assistance from Gulf nations have helped stem the outflow of reserves but also this is unsustainable. (http://blogs.ft.com/beyond-brics/2013/01/25/post-arab-spring-egypt-in-four-charts/)

Egypt is heading for an abyss.

 

http://blogs.ft.com/the-world/2013/01/in-the-picture-a-return-to-emergency-law-in-egypt/#respond