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Violence in Egypt takes a toll on economy

Egypt's economy is beginning to feel the effects of the ongoing violence as international firms temporarily halt production. The lucrative tourism industry is particularly hard hit as visitors stay away from the country.

The bloody unrestis taking its toll of Egypt's economy. Demand for travel to the country has dropped significantly, German tour operators said. Some international companies have temporarily shut down production. German companies, however, do not plan to withdraw from Egypt, according to the Chambers of Commerce and Industry (DIHK), a German trade association.

"The businesses that are there will not throw in the towel," DIHK head of foreign trade Volker Treier said. However, the 80 German businesses in the country that employ about 24,000 Egyptians will have to temporarily shut down. "Logistics chains have broken down, some workers can't even reach the production sites," Treier added. "There is a standstill."

Camels, Pyramides of Gizeh

The pyramides are a popular tourist destintation

Sit tight and wait

Electrolux, the world's second-largest producer of home appliances, has closed down production in Egypt until further notice - about 7,000 employees are affected. A company spokesman said reopening would be considered on Saturday. General Motors has also halted the assembly lines in the plant near Cairo. Here, about 1,400 employees are affected.

Europe's largest oil concern, Royal Dutch/Shell also shut its offices for the next few days. Fears that the unrest might have consequences for crude oil shipments through the Suez Canal have prompted a rise in the price of oil: at $111, a barrel of Brent costs more than it has in the past four months, even though Egypt itself is not an important oil supplier.

"No surge in cancellations"

The recent spate of violence is a disaster for Egypt's tourism industry. The country with its 84 million inhabitants is dependent on income from the tourist trade. But bookings are a far cry from what they were before the Arab Spring, when revenue from tourism amounted to about 10 billion euros ($13.2 billion). Revenue has dropped since by about a third. Now, Nile cruises are also being cancelled, and trips to the temples are no longer possible.

Treier

German firms won't give up, Treier says

Foreign Ministry issues travel alert

German tour operator TUI said on Friday that it would cancel all trips to Egypt until September 15. TUI Travel Deutschland and Thomas Cook Germany said customers with trips planned to Egypt would be permitted to change their destination free of charge.

The move came after the Foreign Ministry in Berlin issued a travel warning for all of Egypt. Previously, the ministry had warned only against trips to Cairo and tourist hotspots in Upper Egypt like Luxor, Aswan, the Nile Delta and Nile cruises.

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