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Egypt’s current account deficit remained almost unchanged, recording US$13.6bn in the first three quarters (July/March) of the fiscal year (FY) 2021/22, despite the increase of US$3bn in the trade balance deficit which came as a result of US$14.9 billion rise in merchandise imports (oil and non-oil
Egypt’s current account deficit remained almost unchanged, recording US$13.6bn in the first three quarters (July/March) of the fiscal year (FY) 2021/22, despite the increase of US$3bn in the trade balance deficit which came as a result of US$14.9 billion 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 affected by the COVID-19 pandemic resumed their usual activity. 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. The rise in imports amid escalating global prices led to large-scale portfolio capital outflows. Foreign investors exited the market. This led to a fall in the net inflows into the capital and financial account, resulting in an overall deficit of US$7.3billion in the balance of payments, most of which was registered in January/March 2022.
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The non-oil trade deficit widened by 22.5%, to about US$37.7bn (against US$30.7billion in the corresponding period); as the increase in non-oil imports surpassed that of non-oil exports, as illustrated. The rise was mostly in the imports of production inputs, such as propylene polymers, inorganic and organic compounds, and cast iron; agricultural crops, mainly soybeans, maize, and wheat due to the rise in global prices; medicines; pharmaceutical preparations; gauze pads; and vaccines in light of the state’s efforts to combat COVID-19 pandemic.
