The Iran war is battering an already fragile economy, though Egypt could still reap some gains from the crisis
Whenever Egypt is hit by external shocks or domestic turmoil, one of the first economic reactions is a flight of short-term capital. The current crisis has been no exception. Since late February, when a United States/Israeli assault on Iran started to appear inevitable, about US$7 billion of this hot money has flowed out of Egypt. Investors have been spooked by the prospect of yet another foreign-exchange crisis, as earnings from tourism, remittances, the Suez Canal and exports to the Gulf have come under threat while fuel import costs have soared. This time, the chance of a bail-out from the Gulf Arab states looks doubtful, as their own revenues from oil and gas exports have been choked off.
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