Egypt's Macroeconomics in a GLANCE!

Given the worldwide turbulence coupled with the geopolitical effects, Egypt economy is not far away from the international scene, which turned to be very sensitive and would accordingly affects the investment atmosphere, what are the most updates given the repercussions of this world volatility, the coming lines would answer that.

Welcome again to our bi-weekly newsletter coming to you from Cairo Egypt.

"Oh, not again its Monday and I'm Fasting, miss my coffee a lot." need something simple this time!

"It is simple my friend, while we need to do some simple mathematics to get the macroeconomic scene in Egypt, promise it will be short".

Egypt's?economy became the second largest in?Africa after?Nigeria regarding?nominal GDP, the sixth largest in the Middle East, and?36 worldwide ranking as of 2021.

Since the 2000s, the pace of structural reforms (including fiscal and monetary policies, taxation,?privatization?and new business legislation) helped?Egypt?move towards a more?market-oriented economy?and prompted increased foreign investment

While, to construe the current economical scene in Egypt now and to be reasonable as well about does this 2030 vision is moving towards a factual results or not, let's have a look on the macroeconomy KPI's and what are the prominent reasons behind those KPI's, bear with me....!

First of all, what are the situation of the federal foreign reserve? Subsequent to the Russian/Ukrainian war, the income in foreign currencies mainly the US$ had diminished remarkably and this put Red shades on the federal reserve, as according to IDSC (Information and Decision Support Center), the reserve sloped downwards by [9.5%] approximately from US$ 41.0 Bn. to US$ 37.1 Bn. in only one month after the war, the reserve, with this rate, might stands for only 9-10 months maximum for crucial imports needed. "While, the question needs more analysis, what are pillars for this short and in this minor time too!"

?"Diagram No. 1, the US$ Federal Reserve as of March 2022, as per the CBE".

The answer is in the analysis for the US$ income to Egypt illustrated from 2011until 2022, lots of peaks and troughs, while the Diagram (No. 2) to the left depicts many facts, in brief:

• Top stream is the transfer of Egyptians working abroad which sloped upwards by 74.44 % throughout the illustrated period, while this metric is vulnerable with the existence of the parallel market, this is why the recent floating happened in March 2022.
• Despite, exports income is moderately increased by 14.3%, the corresponding increase in the imports adversely increased by 18.6 approximately throughout the same period, worth to mention too, the imports now reaches its peak by US$ 70.7$ Bn., giving a net trade balance position of US$ 42.1 Bn., as a deficit, meaning 10.4% of GDP. This is why the recent decision by the cabinet in terms of denying the opening of LCs, for saving the US consumption, for the following commodities only after having a separate approval from CBE, e.g. Vehicles, mobiles, fresh fruits, used tires, jewelry,...etc.
• Another decision still under discussion recently, for demurrage fees to be paid in EGP instead of US$.
• Tourism received a double hit, the COVID and the Russian/Ukrainian crises, where 40% of the tourism industry in Egypt come from both countries.
• Last, the "Trojan Horse" which is the direct investment, netted US$ 5.2 Bn. and sloped upwards by only 30% for the illustrated period and marked only 1.8 of the total GDP, which is still too moderate, especially in the light of the continuous enhancement in the investment incentives, These incentives starts to have hefty nose wind due to legitimate concerns of selling the country assets at a lower prices, not only this, the potential comingling of some "Israeli capital funds" that might flow to Egypt through the UAE. CIB, ACCH (Alex. Containers and Cargo Handling Co.) Safi, Watanya gas stations are only the beginning.
• "Hot Money still unfortunately the favorite for the government."
• "Wow, hold your horses geek, its too hefty all these numbers and ratios, please, will need to continue this article afterwards".

To be continued,........

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