Current account deficit narrows in the first half of FY 2019-2020
Current account deficit narrows in the first half of FY 2019-2020: Egypt’s current account deficit narrowed to USD 4.6 bn in 1H2019-2020 from USD 5.3 bn the previous year, according to official data (pdf). The fall was caused primarily by an improving non-oil trade balance and a rise in unrequited current transfers, the central bank said. The decline in the oil trade balance, a drop in the services surplus and an increase in the investment income deficit, however, stemmed the growth. Balance of payments generated a USD 410.9 mn surplus, compared to a USD 1.8 bn deficit in the same period a year earlier.
Non-oil trade balance shows improvements: The non-oil trade deficit fell by USD 1.4 bn to USD 18 bn, from USD 19.4 bn. A key contributor was merchandise exports, which rose by USD 940.9 mn to US 9.2 bn, from USD 8.3 bn, mainly gold, radio and TV transmitters, as well as pharmaceuticals. Imports of iron, wheat, spare parts for cars, and pharmaceuticals dropped, also contributing to the deficit decrease.
But oil exports suffered: The oil trade balance entered a USD 733.3 mn deficit from a USD 150.8 mn surplus after oil exports fell 16%. Egypt’s oil exports fell to USD 5 bn during the six-month period from USD 6 bn a year earlier despite rising natural gas exports. There was a marginal decrease in oil imports by USD 79.7 mn to USD 5.78 bn, from USD 5.86 bn.
FDI was solid: Net foreign direct investment rose almost 20% to USD 5 bn, driven by a USD 1.2 bn increase in greenfield investments. Total inflows increased by USD 1.2 bn to USD 9.2 bn, and outflows rose by USD 378.9 mn to USD 4.2 bn.
Other key metrics:
- Tourism revenues increased by USD 460 mn to USD 7.2 bn.
- Suez Canal receipts rose by USD 103.8 mn to USD 3 bn, from USD 2.9 bn.
- Portfolio investments saw net inflows of USD 273.6 mn.
- Unrequited current transfers increased by USD 1.7 bn to USD 13.6 bn, from USD 12 bn, largely due to a 13.5% rise in workers’ remittances.