The financial crisis is hitting Egypt in an unexpected manner: According to a study published by Egypt's Center for Economic Studies, the authorities fear that some half a million Egyptian laborers will lose their jobs in the Gulf states by the end of 2009.
 
This figure comes in addition to unofficial reports that at least 30% of Egyptian construction workers have lost their jobs in the rich oil countries so far.
 
In addition, the transfer of funds from abroad constitutes one of the four important sources of Egypt's foreign currency income, but in light of the global crisis and the freeze in the construction market in the Gulf states, the Egyptians fear a greater loss of income.
 
The construction workers who expected to lose their workplace are commonly temporary workers employed by contractor companies in the Gulf. Due to the termination of projects or the delay in their implementation in light of the credit crunch, the temporary workers are the first expected to lose their jobs.
 
The Egyptian workers' return to the homeland, and the loss of income, poses a very difficult challenge to the Egyptian government, which will find it difficult to offer them employment.
 
The situation in the Egyptian construction sector is not particularly good as well. During the first half of the current fiscal year, the growth rate in the construction sector dropped to 9.4% compared to 15.6% during the same period last year.
 
At this stage, it's difficult to see optimism returning to the Egyptian construction market due to the credit crunch. The local banks are refraining from giving credit to new projects, and the cost of taking a loan has increased by some 13% during the first half of the current fiscal year.
 
Doron Peskin is head of research at Info-Prod Research (Middle East) Ltd.

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