Current deficit drops to $14B in FY17/18: HC Securities



Tue, 25 Jul 2017 - 02:40 GMT


Tue, 25 Jul 2017 - 02:40 GMT

Economy - Pixabay

Economy - Pixabay

CAIRO – 25 July 2017: HC Securities and Investment expected that the current account deficit would drop to $14.3 billion in the fiscal year of 2017/18 from $16.6 billion in the year-ago period, a Tuesday report said.

The investment firm added that the current deficit would level down from 9.5 percent of the gross domestic product (GDP) to 5.4 percent in the FY 2017/18, before further narrowing down to $12.1bn or 3.8 percent of GDP in FY 2018/19.

The decrease is attributable to an improvement in Egypt’s oil trade balance, higher exports and a partial rebound in tourism revenues to pre-revolution levels in 2011, the company said.

HC Securities upgraded its GDP growth estimates to 4 percent for FY 216/17 and 4.4 percent for FY 2017/18, up from 3.5 percent and 4 percent forecasted before, respectively.

HC Securities expected acceleration in the real GDP to 4.9 percent for FY 2018/19, boosted by a recovery in private consumption as inflation moderates and unemployment drops.

The devalue of the Egyptian pound against the U.S. dollar over eight months since the floatation in November, despite the foreign investments flows of $8.4 billion which should make the Egyptian pound approach its fair value, is due to the Central Bank of Egypt (CBE) favoring an undervalued, yet stable currency over a volatile exchange rate.

“Though we understand the negative implications associated with the latter, such policy, in our view, is not helping with containing inflation and partially limits the transmission mechanism of the bank’s monetary policy tools,” the report said.

The investment firm advocates of a gradual appreciation of the Egyptian pound to eliminate the overshooting by the first quarter of 2018, when Egypt’s current account starts to reflect more sustainable foreign currency inflows, mainly driven by the oil trade balance and tourism receipts.



Leave a Comment

Be Social