Military coup in Egypt could cost exporters up to €200m, warns IEA
POLITICAL unrest in Egypt could see Irish exporters to that country lose most of their business this year, an exports body has warned.
Irish exports to Egypt were worth about €235m in 2012 but could fall by as much as €200m this year, according to the Irish Exporters Association (IEA).
Sales to Egypt would "collapse" because of difficulties getting payment from Egyptian customers, the group warned.
The warning comes a day after the Egyptian military mounted a coup to remove the country's Islamist president, Mohamad Morsi, from office.
Markets have generally welcomed the latest developments, because the new military-backed regime is expected to be more Western oriented.
Oil prices fell across the world yesterday after spiking on fears a period of protracted turmoil in Egypt would affect shipping through the Suez Canal. Egypt's borrowing costs fell and shares traded on the Egyptian stock exchange rose sharply.
Irish exporters, however, fear this week's events will affect trade, with goods worth €135m exported last year.
Two-thirds of that came from agriculture, with the bulk of the remaining third made up of pharmaceuticals, but services companies also stand to lose out, according to John Whelan of the IEA.
A further €100m of Irish exports are generated by the services sector, mostly in project management and construction.
"This is a very risky environment for business," said Nour Mohei el Din, of BNP Paribas Egypt, hours before the country's military removed president Morsi.
"We're seeing imports, excluding very basic goods, come almost to a complete halt."
In addition to political instability, the country is also struggling with its worst economic slump in two decades. Egypt is due to pay back $24bn (€18.5bn) worth of debt in the next three months alone.
Yesterday, however, the government's borrowing costs headed for the biggest drop on record and shares surged. (Additional reporting by Bloomberg)