Cairo – Mubasher: Egypt’s balance of payments has indicated an improvement in the country’s main transactions with the world in the first half of its fiscal year 2017/2018, although in some areas, the growth varied, a new report has shown.
The most populous Arab nation has seen a “remarkable performance” in its current account in the six months ended 31 December 2017, Mubasher Financial Services (MFS) said in a note released Tuesday.
Egypt’s current account saw the deficit shrink by as much as 64.0% to $3.39 billion in the period from July to December 2017, from $9.41 billion in previous six months.
Similarly, the country’s trade deficit improved by 1.4% to $18.75 billion from $19.01 billion. The narrower deficit came on the back of higher exports, which registered $12.06 billion in H1 2017/2018, compared to $10.45 billion in the prior half-year period.
The trade deficit, however, “more than offset a subtle growth in import payments” which reached $30.80 billion in the six months ended 31 December 2017, up from $29.45 billion in the previous period.
“As we had expected, the J-Curve of trade balance was not formed on a quarterly basis. Trade deficit widened from $8.94 billion in Q1 FY2017/18 (July-September 2017) to $9.81 billion in Q2 (October-December 2017),” MFS said.
The research firm attributed this increase to an 8.4% rise in import payments to $16.02 billion in Q1 FY2017/18 from $14.78 billion. This increase has offset export growth to $6.22 billion, a 6.5% rise from $5.84 billion, according to the report.
“Like a 'decrescendo' musical part, we see improvement in [balance of payment’s] main items decelerating. However, we are particularly pointing out an outstanding performance of the current account, which we consider a healthy sign,” MFS highlighted.
The research firm further noted that the improvement in Egypt’s services balance has more than offset a relatively resilient trade deficit.
“Overall, we see that a quarter-on-quarter performance reflects softening improvements. However, we believe there is a better improvement in more sustainable items, such as tourism and export receipts, signaling a more positive outlook for some chronic [balance of payment] imbalances,” MFS concluded.
