Bi-Weekly Report 3-16 April 2018


Presidential elections to take place on June 24th -- 17 months ahead of schedule

The fiscal stance became more expansionary in Q1:18

The current account deficit reached a 4-year high of 6.2% of GDP on a 12-month rolling basis in February



Headline inflation rose to a 5-year high of 5.0% y-o-y in March from 3.3% at end-2017

The NBR keeps its key rate on hold, but initiates liquidity-absorbing operations



Headline inflation declined to 2.2% y-o-y in March from 2.8% at end-2017 due to a positive base effect

Leading indicators point to a rebound in economic growth in Q1:18, driven by investment



Headline inflation declined sharply to 1.4% y-o-y in March

NBS may have ended a long cycle of monetary policy loosening, with a surprising cut of its central rate by 25 bps to 3.0% at its April MPC meeting



The Central Bank proceeded with a 25 bp cut of its key rate (28-day CB rate) to an all-time low of 3.0%

House prices posted positive growth for the first time in 7 quarters in Q4:17 (up 3.5% y-o-y), on the back of dissipated domestic political and economic uncertainty



Headline inflation has embarked on a mild upward trend since the beginning of the year, albeit remaining at a relatively low 2%

The BoA is set to keep its key rate on hold before initiating a new cycle of monetary policy tightening in Q2:19



Headline inflation, from negative levels, is set to embark on an upward trend from May and end the year in positive territory

An impressive fiscal performance in 2M:18, due to strong tax revenue and strict spending control, despite the political cycle (February presidential elections)



Customer deposits (FX-adjusted) gained momentum in H1:17/18, underpinned by strengthening confidence in the Egyptian economy and higher EGP remuneration rates

Credit to the private sector (FX-adjusted) lost momentum in H1:17/18, as a result of higher lending interest rates

The NPL ratio declined further to a multi-year low of 4.9% in H1:17/18


Appendix: Financial Markets

Bi-Weekly Report 3-16 April 2018