Data shows Egypt on right track after year of Pound flotation

CAIRO – 11 December 2017: Recent official data showed that the Egyptian economy is on the right track after a year of the pound’s flotation.

The Central Bank of Egypt (CBE) issued an official statement on Sunday that included the dropping of urban consumer price inflation to 26% in November, down from 30.8% a year ago, and annual core inflation to 25.54% in November, down from 30.53% in October. On a monthly basis, core inflation recorded 1.3% in November from 0.7% a month earlier.

More good news from the CBE is that Egypt’s balance of payments recorded a surplus of $5.1 billion during the first quarter (Q1) of 2017/18, an improvement from a surplus of $1.9 billion in the same period of the previous fiscal year.

This came on the back of a significant improvement in Egypt’s current account deficit, which narrowed 65.7% to $1.6 billion in Q1 2017/18 from a deficit of $4.8 billion during the same period a year earlier.

Egypt’s trade deficit declined 5.0% to $8.9 billion for the quarter, down from $9.4 billion in Q1 2016/17. This largely came on the back of an 11.0% increase in merchandise exports to $5.8 billion from $5.3 billion in the same period last year. Egypt’s oil exports grew 16.8% to $1.8 billion in Q1 2017/18 from $1.5 billion a year earlier.

Non-oil exports rose 8.6% to $4.1 billion in the first quarter of the state’s fiscal year, up from $3.7 billion in the same period a year ago.

Merchandise imports were basically flat, rising just 0.7% to $ 14.8 billion.

Scoring another big win for tourism, tourism receipts for the quarter grew to $2.7 billion, up from $758 million in Q1 2016/17, in another sign of how far the sector has come in one year.

Remittances are soaring, improving nearly 40% to $6.0 billion from $4.3 billion last year, also thanks to a cheaper local currency.

Net FDI fell slightly to $1.6 billion in Q1 2017/18 from $1.9 billion in the same period last year despite an 84.2% rise in investment in the oil industry, CBE data showed.

Finance Minister Amr El Garhy said that foreign investment in Egyptian securities hit $19 billion as of December 6 since the flotation of the Egyptian pound, Reuters reports. Foreign portfolio investment rose to $7.5 billion in the CBE’s reporting period, thanks mainly to increased foreign holdings in Egyptian treasuries, which stood at $7.4 billion at the end of the period.

Suez Canal revenues also continued to be among the weak links, growing a marginal $82 million to $1.4 billion in Q1 2017/18.

Also set to help the balance of payments, the Petroleum Ministry will begin test production from the Zohr natural gas field “in the coming few days,” according to a ministry statement picked up by Bloomberg.

Bloomberg reported on Sunday that the fall inflation rate offers the latest evidence that the economy is rebounding 12 months after the currency flotation.

“Egypt's inflation falls to lowest this year,” Reuters said on Sunday.