Egypt’s current account deficit remains almost unchanged at $13.6bln in July/March FY 2021/22

Egypt’s current account deficit remains almost unchanged at $13.6bln in July/March FY 2021/22

Egypt’s current account deficit remained almost unchanged, recording $13.6bn in the first three quarters (July/March) of fiscal year (FY) 2021/22, despite the increase of $3bn in the trade balance deficit which came as a result of $14.9bn rise in merchandise imports (oil and non-oil).

The widened trade deficit mainly reflected the unprecedented inflationary waves currently sweeping the world as the sectors that had been deterred by the COVID-19 pandemic resumed their usual activity. Furthermore, adverse impacts of the Russia-Ukraine crisis which coincided with the western sanctions on Russia, drove fuel and primary commodity prices to unprecedented levels. This has led many countries to tighten their monetary policies to contain inflation.

The global economy has endured the ramifications of the Russia-Ukraine war, and Egypt was no exception. Besides the rise in imports amid escalating global prices, the economy has been affected by large-scale portfolio outflows by foreign investors which exited the market in a seamless manner. This led to a fall in the net inflows into the capital and financial account, resulting in an overall deficit of $7.3bn in the balance of payments, most of which was registered in January/March 2022.

Factors that adversely impacted current account:

Non-oil trade deficit widened by 22.5%, to about