Morsi's power grab has made headlines, but the world's most populous Arab country has even bigger problems on its hands.
The international media have made a huge story out of Egyptian President Mohamed Morsi's power-consolidating decrees and the balloting on his proposed constitution. How the fundamental political disputes -- between factions of the religious and secular, Islamic and Christian, and civilian and military, and between rich and poor and urban and rural -- will be resolved in the Middle East's most populous nation is seen as a harbinger for the political impact of the Arab Spring.
A companion story has received much less mainstream media attention: Egypt's escalating economic crisis since the Tahrir Square uprising. Yet the question of whether and how Egypt deals with these economic issues is deeply intertwined with the salient political questions, and has significant implications for the future. Indeed, a lack of economic opportunity was arguably as significant a cause of the Egyptian "revolution" as political repression.
The downward spiral of the Egyptian economy is reflected in almost every economic indicator. GDP growth has declined from over 5 percent to under 2 percent. Unemployment has climbed to 12 percent, with half of those aged 15-24 lacking jobs. Inflation has spiked to over 10 percent. Foreign direct investment has withered from $2.9 billion in the first quarter of 2011 to $219 million in the first quarter of 2012. Foreign currency reserves have dropped from $35 billion to about $15 billion, as both tourism and foreign investment have suffered a precipitous decline. The total market value of stocks traded on Egyptian exchanges has declined by more than half. The budget deficit has climbed to 11 percent of GDP. Twenty-five percent of the government's $84 billion in annual outlays subsidize food and energy, not just for the poor but for better-off Egyptians. Yet the number of those who are poor or near poor has climbed to nearly 50 percent of the population of 80 million. These trends have continued unabated from a year ago.