Firms suspend business after Egypt violence

 
City A.M. Reporter
VIOLENCE in Egypt that has left hundreds dead prompted multinationals to suspend business yesterday and raised fears that two years of economic crisis may quickly get worse.

General Motors closed its assembly plant outside Cairo and shut its office there, and oil giant Shell shut its offices for the next few days and restricted business travel. BP said oil production was not affected.

The stock exchange was shut and said it would open again next week, while the central bank told all banks to stay closed. Shipping sources said the Suez Canal and its ports were operating normally.

Industry representatives from Turkey, an important economic force in the Middle East, said others were likely to follow the lead of foods group Yildiz Holding, which employs 910 people in Egypt. “We decided to halt production in Egypt after the state of emergency announcement on Wednesday to protect our staff,” Yildiz chairman Murat Ulker said.

The move comes a day after at least 638 people were killed when security forces broke up the camps of protesters allied to the Muslim Brotherhood.

The protesters had been staging sit-ins for weeks, demanding the reinstatement of President Mohammed Morsi, overthrown by the army in July.

Egypt’s economy was growing at about seven per cent a year for several years, but even that rate was barely enough to produce work for the large number of youths entering the job market. It expanded by just two per cent in 2012 and 2.3 per cent over the nine months to March.

More than 4,500 factories have shut, swelling by hundreds of thousands the ranks of unemployed. The official unemployment rate is about 13 per cent, but private analysts believe the actual rate is much higher.