Egypt Imports More Than It Exports …Trade Deficit Grows

THE CENTRAL BANK OF EGYPT (CBE) released Balance of Payments (BOP) figures for the first half of FY2007/2008 (July to December 2007). The merchandise trade deficit rose to $11.3 billion, up 71% from $6.6 billion in 1H FY2006/2007. Exports grew strongly, by 22.8% year-on-year (Y-o-Y) to $13.1 billion, but were outpaced by the growth in imports, which rose by 41.2% Y-o-Y to $24.4 billion, a reflection of both Egypt’s strong economic growth and increasing demand for some goods, but also by global price rises in commodities, amongst other items. Tourism receipts climbed to $5.6 billion in 1H FY2007/2008, up from $4.3 billion a year before, and workers’ remittances also showed very strong growth, rising to $4.0 billion, from $2.7 billion in 1H FY2006/2007. The Current Account registered a deficit of $245.7 million, down from a surplus of $1.9 billion in I H FY2006/2007. The net inflow of Foreign Direct Investments in the first half of FY2007/2008 rose to $7.8 billion versus $7.2 billion last year. The overall balance achieved a surplus of $3.1 billion in 1H FYO7/08 versus $2.9 billion in the corresponding period in 2007. Egypt’s Net International Reserves (NIR) registered a new high of $$32.9 billion at the end of February 2008, up from $32.1 billion in January 2008. NIR had been rising steadily since October 2004 when they registered $14.8 billion. The increase in NIR could be due to the inflow of foreign currency from the execution of the sale of the cement arm of Orascom Construction Industries (Am Cham member) to Lafarge and to portfolio investments targeting the Egyptian stock market.