Egypt's trade deficit nearly doubled in the year through April as demand for its exports fell 14% but import costs rose:

Egypt's trade deficit soared to LE17.5billion ($2.9 billion) in April, 79.6 per cent higher than the same month the previous year, the state statistics agency CAPMAS said on Monday. The total value of Egyptian exports shed an annual 14 per cent, down to LE15.1 billion from LE17.6 billion in April 2011. CAPMAS attributed the drop to the decrease in international demand for Egypt's petroleum products, garments, fertilisers, fruit and dairy products.

On the other hand, the value of imported goods to Egypt, saw an increase, from LE27.3 billion in April last year to LE32.6 billion in the same month 2012, which suugests potential economic recovery because these imports feed into further economic activity. Egypt's main imports are petroleum products, steel, raw materials and wheat.

With the jump in wheat and other grain prices due to the American drought, Egypt's import costs will rise substantially. Given the collapse of tourism and the sharp reduction of worker's remittances after the Libyan revolution, Egypt's current account deficit will be almost as large as its trade deficit. That means Egypt will have its hand out for some $30 billion a year -- much larger than the most pessimistic estimates (including mine) just a few months ago. Egypt has $15 billion in total reserves but only $7 billion in liquid reserves.

I'd say they are in big trouble. My suspicion is that SCAF will let the Muslim Brotherhood government of Mohamed Morsi strut around just enough to attract blame for the disaster now in the works.

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