With Egypt's stock market closed for nearly five weeks, analysts and bankers are growing increasingly worried that the full effect of the protests that ousted Hosni Mubarak will be even larger than anticipated.
For the past few weeks, Egyptian officials have looked to downplay the potential damage to the economy. They said growth for the current fiscal year may take a hit, but the Arab world's most populous nation would ride through the unrest. That is now being called seriously into question.
The 18 days of protests that toppled Mubarak, followed by mass labor unrest, have hammered at production and sharply unsettled daily life in the country. In addition, some investors have been left feeling that their money was being held hostage because of individual cash transfer limits _ aimed at preventing former officials and businessmen under investigation from sending their money abroad _ hindered investors as well.
"There's still a fair amount of uncertainty, and there has been a clear and direct hit to the economy," said Karim Helal, managing director of CI Capital.
Helal said that there are major concerns about the deepening of the budget deficit as the caretaker government looks to satisfy protesting workers who are demanding higher pay and more benefits. Also weighing on Egypt's economic picture is the expected downturn in foreign direct investment and tourism, two of the country's main foreign revenue sources.
Economic growth figures for the current fiscal year have been revised down to around 4 percent from a projected 6 percent before the Jan. 25 uprising. For calendar year 2011, the forecast has been set as low as negative 2.5 percent by at least one investment bank.
Analysts said domestic spending is sharply down, and there is little evidence that consumers are opening their wallets for big ticket items. In addition, credit growth _ as defined by bank lending _ is seen as sharply retracting, and some consumers are complaining that banks have significantly tightened their lending policies.
"Will banks be cautious in lending in this environment? Absolutely," said Wael Ziada, research head at Cairo-based investment bank EFG-Hermes, adding that credit growth this year would likely be "minimal."
Highlighting Egypt's challenges is that the cost of insuring its debt has climbed. Also, the government, after holding several successful Treasury bill auctions, sold only 3 billion Egyptian pounds ($508 million) of the 4.5 billion pounds in T-bills offered earlier this week.
Even so, Hisham Ramez, deputy governor of the Central Bank, told The Associated Press "it went well," adding that some of the bids were for yields far higher than the Finance Ministry was willing to accept.
Yields on the 266-day T-bills were bid as high as 13.95 percent, while the average yield for those sold was 12.473 percent.
That gives a clear indication that investors are viewing Egypt with increasing caution.
Despite that, the government still did not feel that it had to accept such high interest rates.
The Central Bank's Monetary Policy Committee was to meet later Thursday, and analysts expected that overnight lending and deposit rates would remain unchanged.
Ramez also downplayed the likelihood that the Egyptian pound could face major depreciation pressures, saying that it was trading in a "tight range." The currency has slipped to about 5.91 to the U.S. dollar by Thursday, from around 5.88 to the dollar last week.
"The market is well balanced," he said. "Volumes are at normal levels. There is nothing to worry about."
The Central Bank stepped in weeks earlier to prop up the currency as its slipped to close to 6 pounds to the U.S. dollar, and indicated that it was willing to do so again if needed.
In part, the stability of the currency has been linked to restrictions on the outflow of capital _ a level set at $100,000 per day for individuals.
Economists warn that when such limits are inevitably lifted, even gradually, the currency could come under pressure if the key foreign revenue sources such as tourism and investments aren't back up and the government is left looking for other foreign currency to finance its account deficit.
In one bit of good news for Egypt, ratings agency Standard & Poor's on Thursday said it removed the long-term foreign currency ratings from CreditWatch negative and affirmed its ratings of the country's unsecured foreign currency sovereign debt.
"The ratings could stabilize at current levels, in our view, if Egypt's political transition strengthens the social contract and if government debt dynamics remain within our forecast of net general government debt reaching a plateau of 62 percent of GDP," said S&P credit analyst Mike Noone. But if the political transition falters, S&P warned, Egypt's ratings could be lowered this year or in 2012.
Underlying the somber forecasts by some analysts is a long list of unknowns.
It remains unclear how hard the stock market may be hit once it reopens and investors have their first chance to express their opinions with their money about the political developments in the country.
Expectations are building that the market could reopen next week, though Egyptian Exchange officials have yet to announce a new opening date.
Its relaunch, after it closed down almost 17 percent in two consecutive trading session ending Jan. 27, was delayed several times over the past few weeks. The reasons included installing "circuit breakers" to prevent a collapse, compiling lists of officials and businessmen whose assets had been frozen for various alleged crimes and the resignation of Prime Minister Ahmed Shafiq just weeks after he was appointed by Mubarak.
A list provided by the Egyptian Exchange showed that as of March 9, some 148 people have been temporarily barred from trading their shares on the market.
It includes Mubarak, his wife, their two sons and their respective spouses and children, as well as top businessmen and former ministers. The moves are in tandem with a freezing of those individuals' assets, in some cases abroad as well as in Egypt.
With each delay comes the possibility that already tense investors will be more eager to dump their stocks. Among the hardest hit would likely be companies _ mainly property developers _ with close ties to officials or businessmen under investigation for corruption.
Egypt's second largest property developers, Palm Hills, has already had its contract for a land purchase called into question _ a challenge that could have broad repercussions for other major property developers that the Egyptian public views as having bought state lands at a fraction of their market value.
Palm Hills is tied to former Housing Minister Ahmed Maghrabi who, himself, is under investigation and has had his assets frozen.
Other sectors could also take a hit, simply because of direct or indirect links to individuals being investigated.
"There's gong to be a very real psychological impact ... because even though the freezing of the assets is related to individuals, not the companies, it raises question marks about the companies associated" with those individuals, said CI Capital's Helal.