Egypt’s economic siren

First, if the social and political disorder persists, Egypt’s economy will end up with crippling inflation, severe balance-of-payments problems, and a budgetary crisis. The risk of a vicious, self-reinforcing downward spiral would rise sharply.

But, rather than collapse (in the style of Asian and Latin American economies during the debt crises of old), Egypt’s economy would risk a return to stifling controls and black markets. Economic efficiency, investment, and employment would take a significant hit, while slower growth would be accompanied by higher prices, including for basic food items.

Most segments of society would be harmed, with the poor, the unemployed, and the young suffering disproportionately. With that, the legitimate objectives of the revolution that began on January 25, 2011—inclusive growth, social justice, and human dignity—would prove even more elusive.

Second, no durable economic and financial solutions are possible without cooperatively addressing the country’s political quagmire. No matter how well intentioned and gifted, technocrats cannot ensure proper policies and deliver optimal outcomes. They need the backing of a unifying national vision, credible leadership, and citizens’ support.

Third, faced with chronic economic disorder and political instability, Egyptians increasingly lament

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