Egypt’s current account balance is expected to drop by 4.3 percent over 2020, and to fall by 4.5 percent in 2021, according to the International Monetary Fund’s (IMF) Regional Economic Outlook Report issued on Wednesday amid the IMF and World Bank spring meetings.
The current account is a key indicator of an economy's health. It is defined as the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.
The report said that the general governmental fiscal balance is projected to decline by 7.7 percent over 2020, and Egypt’s inflation rate is expected to record 4.9 Y-o-Y over 2020 and up to 7.2 percent Y-o-Y in 2021.
The MENA region’s average growth in 2020 is expected to contract by 1 percent, according the report.
The projected global contraction and the resulting decline in global demand have already led to a large drop in international commodity prices, affecting food and non-oil exporters, according the report.
Moreover, extra demand and supply shocks, through trade, tourism remittances, tighter global financial conditions, and spillover on domestic credit conditions, along with preventive measures, would severely curb trade for Egypt and its net tourism credit, in addition to affect domestic production and businesses, according the report.
As a majority of MENA countries are witnessing weak growth, the report excludes Egypt from challenges that the region is expected to witness on the back of the COVID-19 outbreak, because Egypt has managed to benefit from thriving commodity extraction and higher external demand.