INCLUSIVE GROWTH AND JOB CREATION CONFERENCE The Central Egypt (CBE), Egypt s Finance Ministry and the International Monetary Fund (IMF) organized the Inclusive Growth and Job Creation Conference in Cairo on the 6 th of May 2018, with the participation of Mr. Dante Campioni, ALEXBANK s Chief Executive Officer and Managing Director, as a key panelist in the conference. The Egyptian Prime Minister, Sherief Ismail, inaugurated the conference, which aimed to highlight the successes in macroeconomic stabilization that Egypt has achieved and discuss reforms needed by Egypt to attain higher economic growth and job creation. During the conference, Ismail announced that the recent period has witnessed an improvement in a number of economic indicators, including the increase in tourism and Suez Canal revenues and exports proceeds, in addition to the rise in GDP growth rate to 5.3% in Q2 FY 2017/18 and reaching record levels of foreign reserves, exceeding USD44 billion. Ismail also stressed on the government s commitment to continue economic reforms. The CBE governor, Tarek Amer, also stated that the bank has worked on maintaining monetary stability and improving labor market conditions, as well as abolishing all restrictions imposed on movement of foreign currency. The economic growth strategy should be specifically shaped to promote sustainable jobs creation policies, tailor made on the specific characteristic of the territories. These should focus on setting all the conditions to attract private investments especially in labor intensive sectors like Constructions, Agriculture, Manufacturing, Hospitality & Retail, which can contribute to job creation more than proportionally to GDP formation, with a specific focus in segments where particular strengths of the Country can be identified Dante Campioni ALEXBANK s Chief Executive Officer and Managing Director 7 th May 2018 IN THIS ISSUE Egypt s Banking Sector Updates Automotive Sales Rebound Egypt s Net International Reserves Increase A New Oil Discovery In The Egyptian Western Desert Egypt s Non-Oil Exports Hike Egypt Is The World s Third Fastest Growing Economy 1
EGYPT S BANKING SECTOR UPDATES The Central Egypt (CBE) released its monthly statistical bulletin (February 2018 issue), showing the performance of the Egyptian banking sector at the end of December 2017, as follows: EGP BN. DEC-17 DEC-16 Y/Y% Securities & Investments in T-Bills 1,698.25 1,590.53 6.8% Loans and Discount Balances 1,463.38 1,300.24 12.5% Assets 4,813.34 3,962.64 21.5% Provisions 110.04 104.201 5.6% Deposits 3,314.14 2,754.17 20.3% The corporate sector accounted for 75.5% of total non-government credit facilities, while household deposits acquired 78.5% of total non-government deposits at the end of December 2017. The relative breakdown of non-government credit balances by economic activity shows that the manufacturing sector accounted for (35.5%), followed by services sector (29.3%), trade (9.6%), agriculture (1.1%), and unclassified sectors, including the household (24.5%) The CBE Monthly Statistical Bulletin, February 2018 The CBE Official Website According to the Automotive Marketing Information Council (AMIC), Automotive sales rebounded in Q1 2018, where total vehicle sales jumped 32.3% y-o-y in Q1 2018, with around 35,100 units sold. Passenger Car (PC) sales rose 24% to 24,449 cars, while Truck sales soared 91% during the quarter to 7,440 units, up from 3,900 during the same period last year. PC market YTD 2018-2017 by brand origin European Japanese South Korean US Chinese Increased by 49.8% Decreased by -4.9% Increased by 57.5% Increased by 62.5% Decreased by -9.8% 2
Egypt s Net International Reserves grew to an all-time high record reaching USD44.03 billion in April, up from USD42.61 billion in March. In parallel, the CBE issued directives to lift certain import restrictions issued back in 2015. The new order cancelled a directive that required an importers bank to deal directly with an exporter s bank in documentary collection, instructing banks to handle documentary collection through their clients. The order also exempts MSMEs that import essential food goods from making EGP deposits to cover letters of credit to 100% of the payment amount in USD. The Italian oil and gas company, Eni, announced an oil discovery in the Faghur Basin in Egyptian Western Desert on the 3 rd of May. The exploratory well, named SWM A-2X, has been opened to production and delivered 2,300 barrel of oil per day (BOPD) of light oil. Eni plans, in the near term, the drilling of other exploratory prospects located nearby A-2X discovery that, in case of success, may open a new productive area in Egypt Eni s Statement The official website 3 rd May2018 Egypt s non-oil exports surged to USD6.324 billion in Q1 2018, rising 15% y-o-y from USD5.52 billion, bringing down trade deficit by 2%. The industrial sectors that witnessed a major export growth in the first quarter are chemicals and fertilizers (24%), ready-made garments (17%), engineering industries (10.5%), medical industries (9%), construction materials (8.5%), textiles (6.5%), linens (5.5%), food industries (5%) and agricultural crops (4.5%). The top markets that received Egyptian exports during Q1 2018 included: UAE, Saudi Arabia, US, Germany, Russia, Spain, Turkey, Italy and UK. Exports to theses nine countries amounted to USD3.21 billion, up 8.5% from the previous year Trade and Industry Ministry Official Website 27 th April 2018 3
The Center for International Development (CID) at Harvard University released The Global Growth Projections report, where Egypt was ranked as the world s third fastest growing economy in the coming decade while India and Uganda came in the first and second place respectively. The report expected Egypt s annual economic growth to reach 6.63% by 2026. The growth projections are based on Economic Complexity, a single measure of each country s economy which captures the diversity and sophistication of the productive capabilities embedded in a country s exports The Global Growth Projections report ArabFinance 6 th May 2018 A delegation from the IMF arrived in Cairo on Friday, on a visit that aims to review Egypt s progress on economic reform program, ahead of disbursing the fourth instalment, worth USD2 billion, of the USD 12 billion IMF loan. It s worth noting that the IMF undertakes a review twice a year to monitor the government s commitment to reform before disbursing a new tranche of funding. The tranche is expected to be received around the middle of the year, as announced by Jihad Azour, the IMF Director of the Middle East and Central Asia. 4
EGYPT AT GLANCE EXCHANGE RATES 26 24 23.89 USD 7 TH MAY 18 30 TH APR 18 10 TH APR 18 7 TH MAY 17 2 ND JAN 18 17.65 17.65 17.65 18.05 17.72 22 20 18 16 14 21.07 17.65 12 EUR 21.07 21.44 21.76 19.80 21.27 10 8 STERLING POUND 23.89 24.25 24.96 23.42 23.92 6 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-1 EGP per USD EGP per Euro EGP per Pound Sterling STOCK MARKET 7 TH MAY 18 30 TH APR 18 10 TH APR 18 7 TH MAY 17 2 ND JAN 18 EGX30 17,521 18,296 17,697 12,692 15,024 EGX70 871 877 868 598 835 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 17,521 EGX100 2,261 2,307 2,260 1,396 1,982 2,000 0 T-BILLS AUCTION CONSUMER PRICE INDEX AND MAJOR COMPONENTS AUCTION DATE MATURITY (DAYS) AVERAGE YIELD (%) WEIGHT IN BASKET % MAR 2017 MAR 2018 Y/Y 6 TH MAY 18 91 17.476 (INDEX) (JANUARY 2010=100) 3 RD MAY 18 182 17.427 HEADLINE- ALL ITEMS 100% 230.50 261.20 13.32% 6 TH MAY 18 266 17.567 FOOD AND BEVERAGES 39.92% 298.44 333.80 11.85% 3 RD MAY 18 357 17.020 TOBACCO AND RELATED PRODUCTS 2.19% 429.47 518.35 20.70% INTEREST RATES CLOTHING AND FOOTWEAR HOUSING, WATER, ELECTRICITY AND GAS 5.41% 18.37% 156.93 140.89 190.99 155.85 21.71% 10.62% OVERNIGHT DEPOSIT RATE OVERNIGHT LENDING RATE CORRIDOR RATE CURRENT 16.75% 17.75% 17.25% PREVIOUS 17.75% 18.75% 18.25% -100 bp -100 bp -100 bp FURNISHINGS AND HOUSEHOLD EQUIPMENT MEDICAL CARE TRANSPORTATION COMMUNICATIONS 3.77% 6.33% 5.68% 3.12% 201.31 194.31 181.36 98.59 223.46 209.06 205.51 109.41 11.00% 7.59% 13.32% 10.97% GLOBAL COMMODITY PRICES RECREATION AND CULTURE EDUCATION 2.43% 4.63% 219.19 246.00 304.00 294.16 38.70% 19.58% BRENT CRUDE* GOLD** 7 TH MAY 18 30 TH APR 18 6 TH APR 18 8 TH MAY 17 2 ND JAN 18 75.54 75.17 67.11 49.34 66.89 1,310.62 1,315.39 1,333.03 1,226.23 1,311.8 HOTELS, CAFES AND RESTAURANTS MISCELLANEOUS GOODS AND SERVICES 4.43% 3.73% 263.97 159.06 293.23 185.24 11.08% 16.50% WHEAT*** 517.5 510.5 472.25 433.5 433.5 5 *USD/BARELL **USD/OUNCE SOURCE: BLOOMBERG ***USD/BU
ALEXBANK RESEARCH... SHARING KNOWLEDGE 6 Abu Simbel Temple, Egypt www.alexbank.com Copyright Notice. The Weekly is a publication of ALEXBANK. No part of this publication may be reproduced or duplicated without the prior consent of ALEXBANK. This publication constitutes a summary of published news, quotes and economic indicators. This material does not constitute analytical economic research nor should be treated as such. All charts and graphs are from publicly available sources or proprietary data. Any views expressed in this publication do not necessarily reflect the opinion of ALEXBANK. The news, views and quotes within this publication are gathered from sources deemed to be reliable but which have not been independently verified. ALEXBANK does not make any guarantee to the accuracy or reliability of such information. AlexBank shall not be liable for any losses or damages incurred or suffered as a result of using its publications in part or in their entirety.