Prime Highlights
- The deficit in Egypt’s current account narrowed to $13.2 billion from $17.1 billion.
- Aided by strong remittances and tourism revenues recover.
Key Facts
- Remittances increased 86.6% on an annual basis to $26.4 billion.
- Suez Canal revenues fell significantly due to disruption of shipping in the Red Sea.
Key Background
The economic climate of Egypt saw a tremendous jump in the external balances with its current account deficit falling to $13.2 billion during the first nine months of the fiscal year from $17.1 billion during the same period last fiscal year. Such sound transformation was largely due to two such vital industries—tourism and worker remittances—registering good performances while the region and the rest of the world continued to reel under economic afflictions.
Egyptian remittances from foreign nationals grew robustly by 86.6% to $26.4 billion. The massive expansion is due to renewed confidence among the diaspora, built on currency reform and stabilisation efforts. At the same time, tourism revenues rose 23%, to $12.5 billion from $10.9 billion, as a result of robust post-pandemic recovery, enhanced security, and competitive marketing of Egypt’s historical and beachside attractions.
But Egypt’s energy trade balance suffered. Oil exports fell slightly to $4.2 billion whereas oil imports grew to $14.5 billion—nearly 50% more. Increased domestic consumption of power and lower natural gas supplies from neighboring producers, particularly during times of geopolitical tensions in the neighboring nations, were the reasons.
Adding its weight to the economy was the decline in Suez Canal revenues, falling spectacularly from $5.8 billion to $2.6 billion. Added to the meddling in the seas which resulted in traffic in the Red Sea, commercial shipping falling victim to because of geopolitical tensions over the Yemeni Houthis diverting global shipping away from Egypt’s lifeblood waterway.
On the other hand, foreign direct investment inflows to the nation fell to $9.8 billion from a previous fiscal year’s $23.7 billion as investors became cautious owing to a lack of clarity in the region, inflationary pressures everywhere, and constricting finances.
However, Egypt’s overall external position was stable, hence suggesting that its service sectors engaged a strategic balance of balancing trade deficits and attracting crucial foreign currency inflows.
