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Monday, 1 February 2021

Egypt’s current account deficit widens to USD 2.8 bn + tourism revenues mount slow recovery

Egypt’s current account deficit doubled y-o-y in the first quarter of FY2020-2021 to USD 2.8 bn, from the USD 1.4 bn recorded in 1Q2019-2020, the central bank said in a statement (pdf). On a quarterly basis, the account deficit shrank 27.2% from USD 3.8 bn in 4Q2019-2020.

Tourism revenues still plunged, but are slowly getting better: The sector scraped together USD 0.8 bn in revenues from July through September 2020, compared to USD 4.2 bn over the same period in 2019. This is a 162% increase from the meagre USD 305 mn registered the previous quarter with the grounding of international commercial flights to stop the spread of covid-19. Transport receipts also took a USD 524.5 mn y-o-y hit off the back of the struggling aviation industry, with bringing in only USD 1.7 bn during the quarter.

Trade deficit widened: The non-oil trade deficit widened to USD 8.7 bn, from USD 8.2 bn in 1Q2019-2020, due to non-oil and non-raw material imports rising 4.1% y-o-y to USD 13.4 bn, compared to USD 12.9 bn.

Suez Canal revenues dipped to USD 1.38 bn from USD 1.5 bn in 1Q2019-2020, though the figure was a slight improvement from the USD 1.34 bn recorded in the previous quarter.

Meanwhile, foreign direct investment decreased 31.8% y-o-y to USD 1.6 bn from USD 2.4 bn, due to net outflows of USD 75.3 mn from the oil and gas sector, a USD 55.6 mn drop in non-oil investments, and the contraction of greenfield investment inflows by USD 27.7 mn. The CBE also cited a drop in real estate purchases from non-Egyptians during the quarter.

On the bright side, remittances are looking up: Egyptian expats sent USD 8 bn back during the first three months of the fiscal year, up 19.6% y-o-y from USD 6.7 bn, and up from the USD 6.2 bn recorded the previous quarter.

And portfolio investments turned positive, recording net inflows of USD 6.7 bn compared to outflows of USD 2 bn during 1Q2019-2020. Overall, the capital and financial account witnessed net inflows of USD 3.9 bn, compared to USD 657.9 mn for the same quarter the year prior.

The overall balance of payments registered an improvement from the previous quarter, coming in at a deficit of USD 69.2 mn compared to a deficit of USD 3.5 bn in 4Q2019-2020. The BoP still hasn’t recovered to its 1Q2019-2020 performance, when it recorded a surplus of USD 227 mn.

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