3 Arab countries lose $16 billion due to the war in Gaza

The Monetary Policy Coordination Council in Egypt, which includes the Ministerial Economic Group, the Central Bank of Egypt, and some experts, discussed the repercussions of the war in Gaza on the Egyptian economy, and ways to hedge to protect the economy from what is happening.

The Council highlighted that the major impact will be on the tourism sector, in addition to the rise in prices of major commodities as a result of the impact of the war on the world.

$16 billion

The tourism sector in Egypt, Lebanon and Jordan could lose $16 billion in the worst war scenarios, according to an international report.

According to a report issued yesterday by Standard and Poor's Global, Lebanon is the most dependent on tourism among the three countries, and the country's gross domestic product may decline by up to 10% if tourism revenues decline between 10 and 30% from 2022 levels.

Tourism sector

He added that Egypt will lose between $1.2 billion and $8.4 billion if tourism revenues decline between 10 and 70%. This equates to a loss of between 0.3% and 1.8% of the country's GDP.

The tourism sector in Egypt employs about 10% of the population, according to the report.

In Egypt, where the government has already turned to the International Monetary Fund to ease its economic crisis, many tourist bookings in Sinai, which borders Gaza, have been cancelled.

“We are already seeing reports of cancellations of reservations in neighboring countries like Egypt,” said Farouk Soussa, a regional economist at Goldman Sachs. “We believe this could cost Egypt billions in lost tourism revenue this fiscal year alone.”

The percentage of cancellations received by the international Egyptian tourism group Travco reached 50% of its total reservations for the remaining months of the year, as a result of the Israeli war on the Palestinian Gaza Strip, according to the group’s president, Hamed Al-Sheti.

Jordan

As for Jordan, the agency expected that the Kingdom would lose between 0.6 billion and 4 billion dollars if tourism income declined between 10 and 70%.

The report expected that the tourism sector in the Middle East and North Africa region would be greatly affected by the war in Gaza, especially in neighboring countries such as Lebanon, Egypt and Jordan.

The report stated that the Middle East and North Africa region was the only region that witnessed a recovery in the tourism sector from the Covid-19 pandemic, and the number of its visitors increased by 20% on an annual basis in the first seven months of 2023 compared to 2019 levels.

Economic effects

Sousa added that there is a high level of uncertainty about the potential impact of the war on the region's economy. He stressed that the risk of escalation may lead to a deepening and widening of the economic effects.