Egypt’s Economy: Back on Track?

In November 2016, a slew of measures were launched in the hopes of solving Egypt’s many economic problems. Appearing to stabilize in the first quarter of the 2017, by the end of the year Egypt’s economy really looked to be back on track.

Between July and December last year, according to a recent report from its central bank, Egypt’s current account deficit narrowed some 64% to $3.4 billion. Behind this welcome contraction was a rebound in remittances from Egyptians working abroad and, most importantly, tourism receipts.¹

Following President Abdel-Fattah El-Sisi’s overwhelming “win” in the recent presidential election, we should reasonably expect to see further fiscal changes resulting from the country’s IMF-supported (by the EFF Arrangement) reform program.²

It will be interesting to see just what effects, in their turn, these changes have on the performance on local stocks.

¹U.S. Central Bank of Egypt: Press Release About Balance of Payments Performance During July-Dec., 2017-2018, http://www.cbe.org.eg/en/Pages/HighlightsPages/Press-Release-About-Balance-of-Payments-Performance-During-July-Dec-,-2017-2018-.aspx

²U.S. International Monetary Fund: IMF Executive Board Concludes 2017 Article IV Consultation and Completes Second Review under the Extended Fund Facility with the Arab Republic of Egypt, https://www.imf.org/en/News/Articles/2017/12/20/pr17511-second-review-under-the-extended-fund-facility-with-egypt

About the Author:

Tom Butcher is an Associate Director at VanEck. Formerly an independent writer, researcher, and consultant focusing, amongst other things, on strategic materials, in particular metals, Mr Butcher has 40 years of experience in finance. He has lectured and spoken at conferences and universities around the world.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.