Supporters of Egyptian President Mohamed Mursi set up a banner as they take part in a protest to show support to him (Photo: Reuters)
It looks like it may just be the end of the line for Egypt's Mohamed Morsi as the ultimatum deadline approaches, given by country's military, to form a common ground with opposition parties or relinquish his role as President.
His defiant comments, around not bargaining with the military, essentially calls for civil war. This was emphasised when he said he will die for democracy.
Morsi thinks he's too legit to quit but that's being tested by thousands of dissident voices who want him out.
Egypt's Crippled Economy
The problem is, economically, that the country became crippled even before this flare-up began.
Therefore, a prospect of a military coup and an interim government until elections take place tarnish the investment case for Egypt.
Since Morsi took over, inflation has run over 8% while a number of facets of the economy continue to contract, such as consumption, industrial production and manufacturing activity.
FX reserves have more than halved since December 2010, standing at around $16bn (£10.5bn, €12.3bn) in May 2013.
Although, Qataris have been donating funds, this change very soon. Libya has also given Egypt a $2bn loan, but I'm sure it is eager to get it back. Elsewhere, Gulf Cooperation Council (GCC) nations are unlikely to help the country's financial situation.
Worse still, Egypt had initially been in talks with the International Monetary Fund (IMF) over a $4.8bn deal, but that's not going to happen any time soon.
The IMF can't bank on a country that's currently suffering from civil unrest and political instability for the foreseeable future.
Aggressive Austerity Will Antagonise an Angry Population
Furthermore, any technocrat interim government ahead of elections will be under pressure to implement economic policy to keep the country afloat. However, that means aggressive austerity measures will antagonise an already angry population.
The supervision from the military to oversee a change in government is not exactly the 'best-case' scenario.
The military has already mismanaged the transition from former Egyptian leader Muhammad Hosni El Sayed Mubarak ito Morsi, with reports of torture and cruelty.
And, tourism is going to get killed, as a number of nations have warned their people not to travel to Egypt, following escalating fears over violence and terrorism.
Until a resolution is found, this will be another blow for Egypt's economic prospects.
Expect the Egyptian stock market and the Egyptian pound to remain under pressure no matter what the outcome following the deadline- Morsi or no Morsi.
The escalation of violence will also underpin fears over supply/disruption of oil as around 5% of seaborne oil passes through the Suez Canal.
And, when assessing the impact on Egypt's neighbours, Libya and Sudan will be watching the oil situation closely, but will avoid interfering.
The rise of insurgence from the Palestine border will worry Israel as Morsi's Muslim Brotherhood is closely affiliated with Palestinian Hammas.
It is likely that Israel will ask the US to step-in, if the situation deteriorates to the point of an imminent uprising of insurgency in Egypt.
On the other side, Syria's Bashar al-Assad will most probably cheer for the removal of Morsi, as both have been at odds with each other, with the latter calling for a holy war.
However, it is unlikely that we will see a flare up of another Arab spring but, economically speaking, this political instability couldn't come at a worse time for Egypt.
Ishaq Siddiqi is a market strategist at ETX Capital
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