IMF raises its forecast for the value of Egypt’s exports of goods and services in the current fiscal year to 50.5 billion USD

Newsletter

29 Jul 2021

For our top macro talks today, the IMF raises its forecast for the value of Egypt’s exports of goods and services in the current fiscal year to 50.5 billion USD. And it is expected to continue in rising registering 75.4 billion USD in 2024/2025. On the other hand, the fund expected that the value of imports would rise to 82 billion USD in the current fiscal year, to reach 104.1 billion USD in 2024/2025. However, we believe that the foreign trade performance index for Egyptian exports and imports would continue to improve during the second half of 2021, following the growth achieved by the exports sector.

With this is mind, the IMF proposed a plan to increase Egyptian exports.
The export market in Egypt is highly concentrated; As 54% of exports went to only nine countries (UAE, USA, UK, Italy, India, Saudi Arabia, Switzerland, Turkey and Germany) in 2019/2020. Egyptian export sector currently enjoys huge untapped potential. So, export-led growth can help achieve higher productivity growth, which ensures continued growth in the long run, noting that exporting companies benefit from access to larger markets, technology transfer from trading partners and improved efficiency through competition.
Moreover, it is expected that the Egyptian economy will grow by 4.5-5% in the second quarter of 2021 and will continue to gather momentum through the rest of the year.
Tourism will once again start making a positive contribution to growth over the quarter. Noting that Egypt’s high-interest rates will continue to be a significant draw for portfolio investment keeping the policy lending rate at 9.25% till the end of 2022. On the other hand, we must mention the global increases in food prices that brings the risk of short-term inflation, which was a little concerning earlier in the year, as Egypt imports much of its food. Food inflation for June 2021 stood at just over 3% Year-on-Year, and will likely continue ticking up. While non-food inflation has been much softer, helping keep headline inflation relatively contained at 4.9%.
In the light of companies talks, first, Swvl in advanced talks to go public via SPAC at a valuation of 1.5 billion USD.
Swvl plans to merge with Queen’s Gambit Growth Capital. Noting that Swvl will be the second Middle Eastern company to take the SPAC route to public markets. Abu Dhabi-headquartered music streaming platform Anghami had announced earlier this year that it plans to go public by merging with a SPAC, Vistas Media Acquisition Company.
Valeo, the leading Buy Now, Pay Later (BNPL) platform in Egypt, announced the signing of a new partnership agreement with the sports sector of SODIC Club S, under which Valeo will provide flexible and affordable financing programs for individuals wishing to join membership.
It is noteworthy that Valeo has made many achievements during 2021 in terms of expanding its range of services, as it signed a number of distinguished partnerships in many sectors, including the American University in Cairo School of Business, the Saudi German Hospital and the Azadea Group.
Second, Banque Misr and BM Financial Leasing Company signed a medium-term Islamic financing partnership contract to finance a financing lease contract for Bonyan Development and Trade Company worth 700 million EGP.
It is worth noting that Banque Misr has a lead in the field of Islamic banking; Being the first public sector bank to establish branches for Islamic banking transactions (Kinana), the number has reached 45 branches throughout Egypt. As for Islamic banking in the field of retail banking, all modern banking services are provided, such as issuing all types of cards.
Third, ExxonMobil Egypt has signed a collaboration and framework agreement with Trella to bring digital innovation to the trucking industry in the Arab republic.
The collaboration aims to provide innovative solutions and tech-fueled growth, marking ExxonMobil’s first direct investment with a tech startup in the Middle East and North Africa.
Equally impotant, Tamweely Microfinance has won The Global Economics Awards 2021 for “Fastest Growing Microfinance Company”.
Tamweely’s gross loan portfolio has grew by 53% in 2020, booking EGP 906 million against EGP 593 million in 2019.Also, GoodsMart, an online grocery shopping service, has raised additional funding of 3.6 million USD led by Sawari Ventures. It is worth mentioning that the demand for online grocery delivery has been exponentially increasing.
Moving to Egypt’s COVID-19 current updates, the Health Ministry announced that will open centers for those who want to get vaccinated for travel purposes in the coming days by showing their passport, visa or airline ticket at the center to get the vaccine required by the country they're going to, and obtain a documented vaccination certificate.
However, travelling to Europe or the US will require to be vaccinated with either the Pfizer, Moderna, AstraZeneca or Johnson & Johnson vaccines all of which either don’t exist in Egypt or are in very short supply. And for Egypt’s COVID-19 vaccines investments, MEVAC for vaccines aims to inject 1.8 billion EGP in new investments into the establishment of three veterinary and human vaccine factories over the coming three years.