Egyptian Crisis

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Egyptian Crisis, Serious Threat to the World Economy?

In the beginning of the year 2011, the world saw a series of uprising and protests that spread across the Middle East and into North Africa. One of the countries that starts the uprising was Egypt. Egypt is a country in North Africa which plays a key role in global economy. The reason for this is because Egypt produces oil and controls the Suez Canal which is used for international trade. The uprising in this country has made significant effects on the global economy such as rising crude oil prices, fall of stock prices, and disruption on world trade. Egypt is one of the largest oil producer in the Africa with oil reserves reaching 3.7 billion of barrel, which puts Egypt on the 5th rank of African largest oil producers behind Libya, Oman, Sudan, and Algiers. During the protest, many of the oil companies’ workers in Egypt, such as Egyptian General Petroleum Corporation (EGCP), Shell, and British Petroleum marched along the streets demanding Hosni Mobarak to step down from his reign. This has lowered the productivity of crude oil in Egypt which lowers the supply of crude oil to the world, thus increasing the price of a barrel of crude oil from US$ 91.38 as of December 2010 to US$ 103 per barrel as of February 2011, the month of protest. The rise of crude oil price will force manufacturers to raise cost. As result, world commodity prices will continue to rise. In the financial market, the political instability in Egypt and rising oil prices will cause a panic among investors. They will withdraw the money which is invested in Egyptian and worldwide stock markets. This will result in a fall of capital inflow to Egypt and several countries that will force economic growth into a slowdown because there is not enough money to fund the businesses and projects. This situation is not good because natural unemployment comes from depressed economic growth; moreover, the Gross Domestic Product will...
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