The deficit in the trade balance dropped by 13.1% in July to EGP 30.9bn, compared to EGP 35.6bn in July 2015, according to the Central Agency for Public Mobilization and Statistics’ (CAPMAS) monthly bulletin of foreign trade statistics.
In a statement issued on Wednesday, CAPMAS noted that the deceleration happened because the value of exports increased by 15.5% to reach EGP 15.4bn in July compared to EGP 13.3bn in July 2015. This came about because of the increase in the value of some commodities, such as crude oil by 33.1%, apparel by 3.9%, fertilisers by 212.3%, and a variety of slurries and food preparations by 6.4%.
The exports of some commodities decreased in July year-on-year, such as petroleum products by 21.3%, primary plastics by 10%, fresh fruit by 20%, and dairy products by 5.8%.
CAPMAS noted that the value of imports decreased by 5.3% to EGP 46.3bn in July, compared to EGP 49bn year-on-year. This was due to the decrease in the value of some commodities, such as raw iron and steel ore by 16.7%, primary plastics by 14.2%, car rides by 35.3%, and medication and pharmacy preparations by 1.7%.
The release showed that the imports of some commodities increased in July year-on-year, such as petroleum products by 7.9%, meat by 34.1%, organic and inorganic chemical materials by 35.9%, and corn by 4.8%.
Aliaa Mamdouh, former economist at CI Capital, said that the deficit decreased owing to factors such as the Saudi support of Egypt’s petroleum needs, which saves a large tranche of imports of petroleum products to Egypt. However, she added, the continuing decline of the deficit may stagnate in October due to the recent political dispute between the two countries and suspension of Aramco oil aid for this month.
She stated that the measures taken by the Central Bank of Egypt and the Ministry of Trade and Industry to reduce the countries’ imports are a main factor. The US dollar shortage in the formal and informal markets also reduced imports, she added.
To continue the declining rate of the trade deficit, Mamdouh said that the government could impose more procedures to reduce imports.
The Ministry of Trade and Industry recently affirmed that there is no intention to ban imports of finished goods that are ready to be distributed. Mamdouh said that such a decision would have an extremely positive effect on the deficit, despite the negative effect on citizens who would lack a lot of imported products.
Several media outlets reported Monday that the government is considering a ban on the import of 15 finished goods worth up to $10bn—with the World Trade Organization’s blessing.