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Index
1. General Trends & Drivers of World Trade in 2017 & Forecast page 3-5
2. UK Export Performance & Trade Confidence Index page 6-9
3. UK Trade with the MENA Region and Egypt page 10-12
4. UK Trade with the MENA Region & Egypt: Product Breakdown page 13-20
2
1. General Trends & Drivers of
World Trade in 2017 & Forecast
• Growth in the volume of world merchandise trade in 2017 was the
strongest since 2011.
• World GDP growth increased by 3% in 2017 and is projected to grow
by 3.2% in 2018
• The pick-up in world trade can mainly be attributed to increased
investment spending and household consumption; investment is the
most trade-intensive component of import demand.
• Growth in merchandise trade was stronger in value than volume terms
in part as a result of higher primary commodity prices.
GENERAL TRENDS & DRIVERS OF WORLD TRADE IN 2017
Prices of primary commodities, Jan. 2014 - Feb. 2018
Indices, January 2014=100 Strong Trade Growth in 2017
Trade volume growth in 2017, the strongest since
2011, was driven mainly by cyclical factors,
particularly increased investment and consumption
expenditure. Looking at the situation in value terms,
growth rates in current US dollars in 2017 (10.7% for
merchandise exports, 7.4% for commercial services
exports) were even stronger, reflecting both
increasing quantities and rising prices. Merchandise
trade volume growth in 2017 may also have been
inflated somewhat by the weakness of trade over the
previous two years, which provided a lower base for
the current expansion.
Until recently, risks to the forecast appeared to be
more balanced than at any time since the financial
crisis. However, in light of recent trade policy
developments they must now be considered to be
tilted to the downside. Increased use of restrictive
trade policy measures and the uncertainty they bring
to businesses and consumers could produce cycles
of retaliation that would weigh heavily on global
trade and output. Faster monetary tightening by
central banks could trigger fluctuations in exchange
rates and capital flows that could be equally
disruptive to trade flows. Finally, worsening
geopolitical tensions could be counted on to reduce
trade flows, although the magnitude of their impact
is unpredictable. Technological change means that
conflicts could increasingly take the form of cyber-
attacks, which could impact services trade as much as
or more than goods trade.
On the other hand, there is some upside potential if
structural reforms and more expansionary fiscal
policy cause economic growth and trade to
accelerate in the short run. The fact that all regions
are experiencing upswings in trade and output at
the same time could also make recovery more
self-sustaining and increase the likelihood of
positive outcomes.
Growth in Trade Volume
The acceleration of world merchandise trade volume
growth to 4.7% in 2017 from 1.8% in 2016 was broad
based, driven by rising import demand across
regions but most notably in Asia. The largest gains
CHART 1
4
were recorded on the import side in developing
economies, where trade growth surged to 7.2% in
2017 from 1.9% in 2016. Import demand also picked
up in developed countries, albeit less dramatically,
as merchandise trade growth in volume terms
increased to 3.1% in 2017 from 2.0% in 2016.
Meanwhile, merchandise exports grew 3.5% in
developed countries and 5.7% in developing
countries last year, up from 1.1% and 2.3%
respectively in the previous year.
Africa, the Middle East and the Commonwealth of
Independent States, saw steady export growth of
2.3% in volume terms due to the fact that demand
for oil and other natural resources tends to be quite
stable in quantity terms. Meanwhile, imports of the
combined regions increased slightly by 0.9%, partly
as a result of higher primary commodity prices,
which raise export revenue in resource exporting
countries and allow more imports to be purchased.
Energy prices more than doubled since January
2016, but even at nearly US$70 per barrel oil
prices still remain below the US$100 level that
prevailed before the middle of 2014 (see chart
1).
5
INTERNATIONAL TRADE REPORT Q1 2018
business confidence and investment decisions, which
could compromise the current outlook.
GDP Growth
World real GDP at market exchange rates is projected
to grow 3.2% in 2018 (up from 2.8% last September)
and 3.1% in 2019. Brighter prospects reflect not only
investment and employment gains but also improved
business and consumer confidence as measured by
OECD business cycle indicators. The final figure of 3.0%
for world GDP growth in 2017 was also stronger than
the previous estimate (2.8% as of last September),
which partly explains the fact that actual merchandise
trade growth of 4.7% for the year exceeded even
optimistic assessments (e.g. 3.6% in September, with a
high-end estimate of 3.9%).
CHART 2
World fuel prices almost
double since January 2016
41%
Developing economies
had a 41% share in world
merchandise trade in
2017
Source: WTO, World Trade Statistical Review 2018 & IMF World Economic Outlook Apr. 2018
US$70 Forecast 2018-2019
World merchandise trade growth is expected to
remain strong in 2018 and 2019 after posting its
largest increase in six years in 2017, but continued
expansion depends on robust global economic
growth and governments pursuing appropriate
monetary, fiscal and especially trade policies, WTO
economists said.
The WTO anticipates merchandise trade volume
growth of 4.4% in 2018, as measured by the average
of exports and imports, roughly matching the 4.7%
increase recorded for 2017. Growth is expected to
moderate to 4.0% in 2019, below the average rate
of 4.8% since 1990 but still firmly above the post-
crisis average of 3.0%. However, there are signs that
escalating trade tensions may already be affecting
Ratio of world merchandise trade volume growth to world real GDP growth, 1981-2018
2. UK Export Performance &
Trade Confidence Index
• The number of UK businesses reporting improved export sales
increased in Q4 2017; manufacturing sector: + 43%, service sector +
27%.
• The British Chambers of Commerce Trade Confidence Index – a
measure of the volume of trade documentation issued nationally,
decreases by 2% in Q4 2017 compared to Q3 2017, but increases by
3.4% compared to Q4 2016.
• The volume of trade documentation issued for the Egyptian market
increases by 0.1% in Q4 2017 compared to Q3 2017, but drops by
11.8% compared to Q4 2016.
• The International Monetary Fund (IMF) reaches a staff-level
agreement on third review for Egypt’s extended fund facility; a
continued vote of confidence in Egypt’s economic reform
programme.
Chapter supported by the British Chambers of Commerce:
The British Chambers of Commerce (BCC) is a dynamic and
independent business network with accredited Chambers in
every nation and region of the UK, and in key markets around the
world. For more information, visit www.britishchambers.org.uk
UK EXPORT PERFORMANCE & TRADE CONFIDENCE INDEX
-40
-30
-20
-10
0
10
20
30
40
50
Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Q1 15 Q3 15 Q1 16 Q3 16 Q1 17 Q3 17
% B
ALA
NC
E
Service Sector Manufacturing Sector
-- Recession --
UK Export Performance
According to the British Chambers of Commerce
Quarterly International Trade Outlook for Q4 2017,
export sales in the manufacturing and services sector
are up in Q4 2017. 43% of exporting manufacturers and
27% of exporting service firms reported increased
export sales in Q4. 40% of exporting manufacturers and
24% of exporting service firms reported increased
export orders.
The Quarterly International Trade Outlook survey also
shows that both sectors are being severely hampered
by the prevalence of skills shortages. Across the board,
three-quarters of exporters that tried to recruit reported
difficulties in finding the right staff. In the
manufacturing sector, the greatest difficulty was in
finding skilled manual and technical labour (69%) and in
the services sector, it was professional and managerial
levels (52%).
*Balance figures are determined by subtracting the percentage of
companies reporting decreases in a factor from the percentage of
companies reporting increases.
+43%
The adjacent graph
shows the balance of
firms reporting an
increase in export sales
compared to those
reporting a decrease
going back to Q1 2008.
The balance of
manufacturers
reporting increased
export sales in Q4 2017
rose from the lowest
post-recession level in
Q4 2015.
+27%
7
Manufacturers report
improved export sales
Service firms
report improved
export sales
CHART 3
Source: British Chambers of Commerce Quarterly International Trade Outlook Q4 2017
124.03 The UK BCC Trade Confidence
Index currently stands at
124.03, where 2007 = 100
Down 2%
on Q3 2017
Up 3.4%
on Q4 2016
BCC Trade Confidence Index - Global
Many types of exports require supporting
commercial documentation. UK Chambers of
Commerce issue certified trade documentation
required for exports outside the EU and as a
result, the British Chambers of Commerce have
amassed a significant dataset around UK
merchandise exports. The Egyptian-British
Chamber of Commerce does the same but
solely for UK merchandise exports to Egypt. The
data collected from this process shows an index
of trade document certification.
The BCC Trade Confidence Index for Q4 2017 - a
measure of the volume of UK trade documentation
issued nationally - decreased by 2% on Q3 2017, but
was up by 3.4% on Q4 2016, the index now stands at
124.03.
After steady growth in export documentation
volumes in Q3 2017, several regions saw a slight
quarterly decline in Q4. The largest quarter-on-
quarter increases were in Northern Ireland (13.3%),
the East of England (9%) and the South West (5.6%)
INTERNATIONAL TRADE REPORT Q1 2018
57.87
The UK Trade Confidence Index
for Egypt currently stands at
57.87, where 2007 = 100
Up 0.1%
on Q3 2017
Down 11.8%
on Q4 2016
EBCC Trade Confidence Index - Egypt
Prior to 2016, the global downturn, and in
particular the unrest in the Middle East region,
caused a serious drop in volume of UK export
documents certified for the Egyptian market.
With stability returning to Egypt, we saw
significant growth in 2014 that carried on into
the beginning of 2015. Growth slowed in the
latter half of 2015 as foreign currency dwindled
due to a lack of tourism and FDI revenue
streams.
New export documentation decrees were
issued by the Egyptian government in
December 2015 and early 2016 – making it
mandatory for overseas exporting companies to
submit one-off registration documents when
shipping goods to Egypt – as a result the Chamber
saw a significant increase in UK export
documentation in the first two quarters of 2016.
Following the initial registration period, growth
slowed again in the second half of 2016 as
economic constraints persisted. Results for Q3 and
Q4 2017 demonstrate that even though Egypt’s
economy is improving, Egypt’s government is
actively working towards reducing import of non-
essential goods in order to reduce its trade deficit.
However, export documentation figures show some
signs of recovery in the beginning of 2018.
8
CHART 4
CHART 5
Source: British Chambers of Commerce Quarterly International Trade Outlook Q4 2017
UK EXPORT PERFORMANCE & TRADE CONFIDENCE INDEX
Trade Analysis & Forecast
The trade documentation recovery in 2014 and the
beginning of 2015 could mainly be attributed to a
return of political stability and increased confidence
in Egypt’s economic recovery post-Arab Spring.
However, reform momentum faded towards the end
of 2015 and continued to hinder trade growth in
2016. A lack of tourism and FDI revenue streams led
to a severe shortage of foreign currency in the
market. While some of the bans on outflow of foreign
currency were lifted earlier in 2016, foreign exchange
shortages still curbed production – and consequently
the export of Egyptian value-added merchandise -
throughout the year.
The Executive Board of the International Monetary
Fund (IMF) approved a three-year $12 billion loan to
Egypt in November 2016 to support Egypt’s
economic reform programme. In July 2017, the IMF
approved the first review of Egypt’s extended fund
facility which allows the disbursement of about $1.25
billion. The deal with the IMF involved a number of
crucial measures, including a cut to Egypt’s budget
deficit, a reduction of subsidies, and tax increases.
A vital part of Egypt’s economic reform programme,
as supported by the IMF, was the decision in
November 2016 to float the Egyptian pound.
Following this decision, the pound lost about half its
value with prices soaring at its fastest pace in almost
12 years in December 2016 – pushed higher by a rise
in fuel prices and a newly introduced value added tax.
The currency has stabilized considerably since, and is
now trading at close to EGP 18 to the dollar. As
predicted in our previous report, inflation has also
dropped from its high of 33% mid-2017 to around
13% currently. Over the medium-term, inflation is
expected to come down to single digits.
Despite some short-term volatility over the past year,
we now see strong signs of market recovery. Egypt is
a more affordable place to travel to and invest in; this
is reflected by a recovery in tourism, strong
remittances and increased inflows of foreign
investment.
The increased liquidity has a positive effect on trade;
and in particular Egyptian exports, as goods have now
become more competitive in the global market. In our
next chapter you will see that Egyptian exports to the
UK have increased by 28% in Q1 2018 compared to
the same period a year earlier, this follows a period of
subdued export growth. UK exports to Egypt however
still lag behind as Egypt’s government works to
narrow its budget deficit by reducing imports of non-
essential items from overseas. We estimate that
recovery will start to take hold on the back of a
stabilizing exchange rate and an improved investment
climate.
9
Highlights from IMF Press Release: Staff-level Agreement on Third Review for Egypt’s Extended Fund Facility
“Egypt’s growth has continued to accelerate during 2017/18, rising to 5.2 percent in the first half of the year from 4.2 percent in
2016/17. The current account deficit has also declined sharply, reflecting the recovery in tourism and strong growth in remittances,
while improved investor confidence has continued to support portfolio inflows. In addition, gross international reserves rose to $44
billion by end-April, equal to 7 months of imports.
“Annual headline inflation has declined from 33 percent in mid-2017 to around 13 percent in April, anchored by the well-calibrated
monetary policy of the Central Bank Egypt (CBE). The CBE remains committed to reducing inflation to single digits over the medium
term, with monetary policy underpinned by a flexible exchange rate regime that is critical for maintaining competitiveness and
adjusting to external shocks. Egypt’s banking sector remains liquid, profitable and well-capitalized.
“Egypt is on track to achieve a primary budget surplus excluding interest payments in 2017/18, with general government debt as a
share of GDP expected to decline for the first time in a decade. The budget for 2018/19 targets a primary surplus of 2 percent of GDP,
which would keep public debt on a firmly downward path. The government also remains committed to continuing energy subsidy
reforms to achieve cost-recovery prices for most fuel products by 2019. Together with raising revenues through tax policy reforms, this
will help create fiscal space for important infrastructure projects, targeted social protection measures and essential spending on health
and education.” IMF Communications Department (May 2018)
3. UK Trade with the MENA
Region & Egypt
• The value of UK trade with the Middle East and North Africa
(MENA) drops significantly in Q1 2018 after a rapid recovery in
2017.
• UK trade with Egypt performs comparatively better, with only a
marginal drop in value of UK exports to Egypt (-4.8%) and a
significant increase in value of Egyptian exports to the UK
(+28.3%)
Introduction
The value of UK trade with the Middle East and North Africa (MENA) shows considerable volatility in 2017,
and largely negative growth in the first quarter of 2018 (see chart 6).
The value of UK exports to the MENA region and to Egypt largely follow the same trend in 2017, with a
spike in exports recorded for both categories in Q4 2017; this is as a result of the increased UK export of
chemical products, plastics and metals both to the MENA Region and to Egypt. In Q1 2018, there is a
sharp downward trend in UK exports to MENA and Egypt; this is largely due to the year-on-year drop in
value of UK export of machinery, mineral products and vegetable products.
Exports from the MENA region and Egypt to the UK also drop significantly in Q1 2018 compared to the
previous quarter after a volatile 2017. Year-on-year Egypt performs significantly better than the MENA
region; the value of Egypt’s exports to the UK increases by 28% compared to a drop of 11% for MENA
exports to the UK during the same period (see table 2); this is primarily as a result of the increased export
of machinery products from Egypt to the UK.
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18
UK TRADE WITH THE MENA REGION & EGYPT
-50
-40
-30
-20
-10
0
10
20
30
40
% Y
EAR
ON
YEA
R G
RO
WTH
PER
QU
AR
TER
UK trade growth with MENA & Egypt, 2015-2018
UK Exports to MENA UK Exports to Egypt
MENA Exports to UK Egyptian Exports to UK
Standard & Poor’s Upgrade Egypt’s Sovereign Credit Rating from B- to B on 11 May 2018:
• A more competitive exchange rate, rising domestic gas production, and increasing exports are helping to
improve Egypt’s current account deficit.
• Inflation is decelerating, which points to the increasing effectiveness of the monetary framework.
• We are therefore raising our long-term rating on Egypt to “B” from “B-“ and affirming the short-term rating at
“B”.
• The outlook is stable.
Source: Standard & Poor’s
CHART 6
B- to B Standard & Poor’s
Upgrades Egypt’s
Credit Rating
UK Exports to MENA % Share
Source: HM Revenue & Customs
UK Imports from MENA & Egypt
Q1 2018 Q1 2017 % Change
MENA £5,127bn £5,998bn -14.5
Egypt £245m £257m -4.8
% of MENA 4.8 4.3
Q1 2018 Q1 2017 % Change
MENA £3,169bn £3,559bn -11
Egypt £202m £157m +28.3
% of MENA 6.4 4.4
Egypt’s Share of MENA Trade with the UK
In the years prior to 2008, Egypt recorded a 7
percent share of MENA trade with the UK on
average. As a result of the Arab Spring - and
subsequent political and economic turmoil -
Egypt’s percentage share of MENA trade with
the UK dropped significantly.
In 2016, UK trade with MENA slowed whereas
trade with Egypt fared comparatively better;
the tables turned in 2017 but in particular
Egypt’s share of UK imports show a recovery in
the first quarter of 2018.
Egypt’s share of UK exports to MENA increases
marginally from 4.3% to 4.8% in Q1 2018,
compared to Q1 2017. Egypt’s share of UK
imports from MENA increases by an
impressive 2% from 4.4% in 2017 to 6.4% in
2018.
11
INTERNATIONAL TRADE REPORT Q1 2018
UK Exports
UK Imports
12
10%
10%
25%
21%
9%
6%
6%
4%
9%
Qatar Algeria
UAE Saudi Arabia
Israel Egypt
Morocco Libya
Others
35%
16%17%
6%
5%
3%
4%
7%
7%
UAE Saudi Arabia
Qatar Israel
Egypt Kuwait
Morocco Oman
Others
UK Exports to MENA
UK Imports from MENA
CHART 7
CHART 8
TABLE 1
TABLE 2
Source: HMRC Trade Statistics
Source: HMRC Trade Statistics
4. UK Trade with the MENA Region
& Egypt: Product Breakdown
• Egyptian exports to the UK significantly outperform UK exports to Egypt in
the first quarter of 2018.
• Products that contribute positively to the value of UK exports to Egypt in Q1
2018 include plastics, chemicals and transport equipment.
• Products that contribute positively to total Egyptian export figures in Q1
2017 are machinery, chemicals and plastics.
CHART 9
UK Exports to Egypt
Egypt is in the midst of a construction boom. In February
2016, the Egyptian government launched its Sustainable
Development Strategy – Egypt's Vision 2030, setting out
national goals for the next 15 years. The Ministry of Trade
& Industry aims at gradually reaching an industrial growth
rate of 8% by FY 2019/2020, and increasing the
contribution of the industrial sector to GDP from 18% to
21% by 2020.
At the top of the government’s priorities list is a
comprehensive urban development plan that expands and
creates new cities across Egypt by developing 80,000
feddans (336 square kilometers) a year to contain the
rapidly growing population. Large government priority
projects, such as the New Administrative Capital, the
expansion of the Cairo metro line and water treatment
projects in Upper Egypt, continue to promote growth in the
sector.
That being said, Egypt is still very much recovering
economically from the effects of the Arab Spring and its
two revolutions. The government is promoting a
conservative approach to importing non-essential items
from overseas to reduce its trade deficit. The recent
21% Targeted industrial
sector contribution
to Egypt’s GDP by
2020
devaluation of the Egyptian pound has also made
sourcing goods from overseas a more expensive affair.
As a result, the UK still exports a significant number of
products to Egypt, but there is a marginal drop of 4.8%
in Q1 2018 compared to the same period last year.
Products that consistently perform well are chemical
products, transport equipment, and plastics (see chart
9).
UK exported value of base metals (iron & steel, export
value: £43 million) to Egypt has historically been more
volatile – partly because it is susceptible to volatility in
world market prices of metals. While world prices have
gone up however (see chart 1), UK export of metal
products has dropped by 12% in the first quarter of
2018.
14
0
50
100
150
200
250
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
IN £
MIL
LIO
N
Q1 Plastics Plastics
Q1 Transport & Equipment Transport Equipment
Q1 Chemicals Chemicals
Growth in value of main UK export products to
Egypt 2008-2018
6%
25%
18%17%
34%
Food & beverages
Raw materials, petroleum & petroleum products
Chemicals, pharmaceuticals & related products
Textiles & manufactured goods
Machinery & transport equipment
UK exports to Egypt by product group Q1 2018
CHART 10
UK TRADE WITH THE MENA REGION & EGYPT: PRODUCT BREAKDOWN
Source: Oxford Business Group & HMRC Trade Statistics
UK Exports to Egypt, Product Breakdown
Rank Commodity 2018 2017 % Change
1. Machinery & Mechanical Appliances (16), of which: 59,588,861 70,885,687 -15.9
Machinery & Mechanical Appliances 35,279,271 42,545,093 -17.1
Of which: Turbojets 2,238,958 2,905,991 -23
Electrical Machinery & Equipment 24,309,590 28,340,594 -14.2
2. Base Metals & Articles of Base Metal (15) 53,321,648 60,657,244 -12.1
3. Chemicals (6), of which: 44,247,509 34,978,828 26.5
Pharmaceutical Products 20,549,374 13,107,208 56.8
4. Transport & Equipment (17) 24,150,425 25,123,485 -3.9
5. Medical & Other Instruments and Parts (18) 14,142,107 13,463,258 0.1
6. Paper & Paperboard (10) 12,113,683 9,545,811 26.9
7. Plastics, Rubber and Articles Thereof (7) 11,153,612 9,744,069 14.5
8. Mineral Products (5) 6,550,712 11,214,971 -41.6
9. Live Animals & Animal Products (1) 5,007,613 2,232,112 124.3
10. Prepared Foodstuffs (4) 4,917,268 2,792,612 76.1
11. Vegetable Products (2), of which: 3,775,735 12,275,677 -69.2
Fruit & Vegetables 3,708,742 12,148,054 -69.5
12. Miscellaneous Manufactured Articles (20) 2,037,805 1,747,306 16.6
13. Textiles & Textile Articles (11) 1,987,375 1,727,952 15
14. Precious Stones, Metals & Jewellery (14) 1,346,457 225,104 498.1
15. Building Materials (13) 312,654 373,793 -16.4
16. Wood and Articles Thereof (9) 247,694 24,124 926.8
17. Fashion Accessories (12) 150,032 101,912 47.2
18. Leather, Hides & Skins (8) 40,704 137,550 -70.4
19. Art & Antiques (21) 27,115 5,008 441.4
20. Animal or Vegetable Fats & Oils (3) 13,326 50,215 -73.5
21. Arms & ammunitions (19) 0 83,147 -100
22. Other (22) 40,829 29,581 38
Total 245,173,164 257,419,446 -4.8
• All figures are in £ thousand
• Full product index on page 20
TABLE 3
15
INTERNATIONAL TRADE REPORT Q1 2018
Source: HMRC Trade Statistics
16 16
Egyptian Exports to the UK
Some of the main drivers of Egyptian export growth to
the UK in Q1 2018 are machinery and mechanical
appliances (+25.6%) chemicals (+75%) and plastics
(+12%).
The fruit & vegetables sector also performs well; in
2016, the sector contributed a record £120 million to
overall Egyptian exports to the UK, and Q1 2018 shows
a further increase of 3% compared to Q1 2017.
Representative of Egypt’s gradual move up the value
chain, chemicals and plastics will be some of the
largest contributors to export growth in the long-term.
The exported value of chemicals to the UK increased
quite considerably in Q1 2018, and already shows a
significant increase at the start of Q2 2018. The value
of chemicals exports is likely to increase this year,
compared to 2017.
Mineral Products & Metals
In 2017 the primary cause for the drop in value of
Egyptian exports to the UK was the decrease in exported
value of mineral products from Egypt to the UK, in
particular the drop in value of crude oil.
The mineral product figures (incl. crude oil) are not
available for Q1 2018, however we can conclude from
table 4 that the two suppressed product groups (Metals
& Mineral Products) add almost £19 million to the actual
totals for Egyptian exports to the UK. This suggests a
moderate recovery in export of mineral products from
Egypt to the UK in the first quarter of 2018.
In Q1 2017 there was a significant slowdown in export of
turbojets, but export of this product but t during the
quarter, as well as a considerable export slowdown in Q1
2017 of turbojets in the machinery sector.
If we take out fuel and turbojet exports, we see an
increase of 5.3 % in the value of Egyptian exports to the
UK; from £143 million in Q1 2016 to £151 million in Q1
2017.
17%
10%
8%
27%
38%
Agricultural products, food & beverages
Raw materials, petroleum & petroleum products
Chemicals, pharmaceuticals & related products
Textiles & other manufactured goods
Machinery & transport equipment
Egyptian exports to the UK by product group Q1 2018
Growth in value of main Egyptian export products
to the UK 2008-2018
CHART 12
CHART 13
UK TRADE WITH THE MENA REGION & EGYPT: PRODUCT BREAKDOWN
Source: HMRC Trade Statistics
0
50
100
150
200
250
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
IN £
MIL
LIO
N
Machinery Q1 Machinery
Chemicals Q1 Chemicals
Plastics & Rubber Q1 Plastics & Rubber
16
Egyptian Exports to the UK, Product Breakdown
Rank Commodity 2018 2017 % Change
1. Machinery & Mechanical Appliances (16) 71,708,443 53,352,117 25.6
Machinery & Mechanical Appliances 15,162,959 6,960,454 54
Of which: Turbojets 12,209,045 5,857,774 52
Electrical Machinery & Equipment 56,545,484 46,391,663 18
Of which: Insulated Wire, Cable and
Other Insulated Electric Conductors
52,888,140 42,863,717 19
2. Vegetable Products (2), of which: 31,869,902 31,062,099 2.5
Fruit & Vegetables 31,278,840 30,138,790 3.6
3. Textiles & Textile Articles (11) 26,445,588 27,021,192 -2.1
4. Chemicals (6) 14,549,877 3,641,833 75
5. Plastics, Rubber and Articles Thereof (7) 11,382,740 10,026,115 12
6. Building Materials (13) 8,355,222 7,001,925 16.1
7. Paper & Paperboard (10) 7,689,914 5,613,013 27
8. Transport & Equipment (17) 3,985,058 7,750,249 -48.5
9. Medical & Other Instruments and Parts (18) 3,448,782 3,399,152 1.4
10. Miscellaneous Manufactured Items (20) 1,282,376 96,993 92.4
11. Prepared foodstuffs (4) 804,628 489,904 39
12. Art & Antiques (21) 578,978 27,971 95
13. Animal or Vegetable Fats & Oils (3) 365,034 207,205 43
14. Precious Stones, Metals & Jewellery (14) 328,739 4,596,969 -92.8
15. Wood and Articles Thereof (9) 54,404 29,830 45
16. Leather, Hides & Skins (8) 11,469 0 100
17. Fashion Accessories (12) 2,408 6,489 -62.8
18. Live Animals & Animal Products (1) 0 50,284 -100
19. Base Metals (15)* * 2,476,881 N/A
20. Mineral Products (5)* * 172,454 N/A
21. Other (22) 249,006 390,879 -36
Total 183,112,568
Actual: 201,981,148
157,413,554
28.3
• All figures are in £ thousand
• Full product index on page 20
* Supressed products (still count towards total values)
TABLE 4
INTERNATIONAL TRADE REPORT Q1 2018
WTO TRADE POLICY REVIEW: EGYPT
17
The fourth Trade Policy Review of Egypt, which has taken place 13
years after the previous one, has provided the opportunity to
deepen our understanding of its trade and investment policies and
practices, and to collectively appreciate the challenges it has faced
in recent years.
Egypt's trade policy objectives are set out in the Industrial Development
Strategy (IDS) for 2016-2020, in accordance with Egypt's SDS "Egypt
Vision 2030". The aim is to help Egypt become a leading industrial
economy in the Middle East and North Africa region and a main export
hub for medium-technology manufactured products by 2025. Egypt's
export base has become more diversified during the review period: the
share of exports of fuel products declined from 43% of total exports in
2005 to 14.3% in 2016. Despite this, fuel remains Egypt's single most
important export product, followed by vegetables, 12.5% precious
stones and metals (11.8%), chemicals (11.3%), and textiles (11.2%).
Egypt's merchandise exports declined in US dollar terms between 2011
and 2016, to US$22.5 billion. In 2016, the European Union was Egypt's
main export destination, followed by the United Arab Emirates, Saudi
Arabia and Turkey. Merchandise imports amounted to US$58.1 billion in
2016. Machinery and electrical equipment is the single most important
import group, accounting for 16.1% of total merchandise imports in
2016, followed by mineral fuels (14.2%) and base metals (11.4%). In
2016, 32.4% of Egypt's merchandise imports came from the European
Union; China and other Asian countries were the source of 27.3% of
Egyptian imports. The customs administration was made more efficient
and transparent, by reducing the number of documents required for
import and export processes and allowing their presentation
electronically. In addition to tariffs, imports are now subject to a value-
added tax of 14% which also applies to domestically produced goods;
exported goods are exempted and services are zero-rated. Egypt also
applies excise taxes on some products in addition to the general VAT
rate.
In 2014, the Government began to implement a reform programme
aimed at stimulating economic growth and improving the business
environment. The first wave of reforms focused on rebalancing the
macroeconomic situation: introduction of the value-added tax (VAT) at a
rate of 14%, a shift in the exchange rate regime from a peg to the US
dollar to a full float of the Egyptian pound in November 2016;
broadening of the tax base; reduction of energy subsidies; and
containment of public sector salary increases. Egypt's economic
programme has been supported by the IMF with a $12 billion loan. Also,
in May 2017, a new Investment Law No. 72/2017 entered into force.
WTO Review
This WTO Review on Egypt is an
update from the previous review
that took place in 2005
Investment incentives under the new law include
deductions on taxable profits and preferential
import duty rates and aim at updating Egypt's
investment regime to attract more investment.
Egypt's FDI inflows averaged some US$6 billion per
year during 2013-16, below the US$9 billion annual
average in 2005-07. The European Union is the
main foreign investor in Egypt, followed by the
United States and some Arab countries.
New regulations for the establishment of free zones
are contained in Law No. 72/2017. There are two
types of free zones: public and private. Public free
zones are established for several projects, whereas
private free zones are confined to one specific
project or company. Enterprises in free zones
benefit from complete exemption from import
tariffs, income taxes and the VAT. They are charged,
however, a fee of 1% or 2% in lieu of taxes. There
are also regional programmes in place to support
MSMEs. Reforms were also made Egypt's
competition policy underwent far-reaching changes
and it sets out prohibitions in respect of the abuse
of dominant position. It also prohibits vertical
agreements or contracts between a person and its
supplier or clients if they are intended to restrict
competition.
As Egypt is not a party to the GPA the two main
procedures for public procurement of goods and
services are public tender and public reverse
auction. Both procurement methods may be open
to both Egyptian and foreign suppliers. Additionally,
MSMEs must be given an extra 10% preference in
any tender. Also, Egypt's Constitution was amended
to provide for the separation of powers between
the executive, the legislature and the judiciary, and
reformed the legislative branch by making it
unicameral.
UK TRADE WITH THE MENA REGION & EGYPT: PRODUCT BREAKDOWN
18
Source: World Trade Organization
In their interventions, WTO Members commended Egypt for its sustained economic growth since its
previous Review in 2005, which has averaged 4.5% annually in the last twelve years. Although GDP growth
slowed down in 2011, in recent years economic activity has accelerated on the basis of an expansionary fiscal policy.
Members remarked that, since 2014, Egypt has undertaken notable reforms, including floating the Egyptian pound,
tax reform, fuel subsidy reform, and further privatization steps. Nonetheless, it was noted that Egypt faces important
challenges, notably reducing its relatively high unemployment rate and poverty alleviation. In this regard, Members
took note that Egypt is implementing an ambitious economic reform programme that stems from its National
Development Strategy (Egypt Vision 2030), that seeks to promote the participation of the private sector in the
economy so as to foster GDP growth, and further address its external and fiscal imbalances. Additionally, the
Industrial Development Strategy 2016-20 aims at making Egypt a leading industrial economy in the Middle East and
North Africa region and a main export hub for medium-technology manufactured products by 2025, thus paving
the way for Egypt to further diversify its trade.
Egypt was commended by Members for being a strong advocate of the multilateral trading system, as
witnessed by its active participation in the WTO. In particular, Members recognized Egypt's participation in
the Information Technology Agreement (ITA) and its ratification of the Protocol Amending the TRIPS
Agreement.
Members recognized Egypt's important efforts to improve its business climate and further liberalize foreign
investment restrictions, including the introduction of a new Investment Law and its regulations in 2017, as well as
reforms in customs administration, making it more efficient and transparent. It was noted, however, that more needs
to be done to improve the business environment, including further simplifying customs procedures, improving the
risk assessment system, reducing red tape and increasing transparency.
Several Members raised questions regarding Egypt's extensive use of import licensing and invited Egypt to notify its
regime to the WTO. Egypt was also encouraged to review import registration and other regulatory requirements,
which some Members considered an obstacle to trade.
Members welcomed the changes implemented with respect to government procurement, namely the steps adopted
to encourage private sector participation in the procurement process and the introduction of new procurement
methods. They noted, however, that the 15% preference granted to domestic suppliers and products remained in
place and enquired about plans to eliminate this preference.
GDP by Economic Activity, 2015/16
Source: World Trade Organization
19
CHART 13
Full Product Index
1. Live animals; animal products
2. Vegetable products
3. Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes
4. Prepared foodstuffs; beverages, spirits and vinegar; tobacco and manufactured tobacco substitutes
5. Mineral products
6. Products of the chemical or allied industries
7. Plastics and articles thereof; rubber and articles thereof
8. Raw hides and skins, leather, furskins and articles thereof; saddlery and harness; travel goods, handbags and similar
containers; articles of animal gut (other than silkworm gut)
9. Wood and articles of wood; wood charcoal; cork and articles of cork; manufactures of straw, of esparto or of other plaiting
materials; basket-ware and wickerwork
10. Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard; paper and
paperboard and articles thereof
11. Textiles and textile articles
12. Footwear, headgear, umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof; prepared
feathers and articles made therewith; artificial flowers; articles of human hair
13. Articles of stone, plaster, cement, asbestos, mica or similar materials; ceramic products; glass and glassware
14. Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles
thereof; imitation jewellery; coins
15. Base metals and articles of base metal
16. Machinery and mechanical appliances; electrical equipment; parts thereof, sound recorders and reproducers, television
image and sound recorders and reproducers, and parts and accessories of such articles
17. Vehicles, aircraft, vessels and associated transport equipment
18. Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus;
clocks and watches; musical instruments; parts and accessories thereof
19. Arms and ammunition; parts and accessories thereof
20. Miscellaneous manufactured articles
21. Works of art, collectors' pieces and antiques
22. Others
Long-Term Outlook
The Chamber is encouraged by the progress
made in 2017 on Egypt’s economic reform
programme. It is progress that continues in 2018,
with growth expected to return to a healthier
5.2% in FY 2017/18 up from 4.2% in 2016/17.
With foreign exchange now more readily available
after the Central Bank of Egypt (CBE) liberalised
the exchange rate in November 2016 - and eased
restrictions on the outflow of foreign currency
mid-2017 - the outlook for 2018 is more
optimistic. Assuming reforms continue to be
implemented, growth should pick up slightly
because of positive developments in the gas,
manufacturing and real estate sectors, alongside
recovery in the tourism sector from recent
security-related issues.
However, managing to contain the large fiscal and
current account deficits in an environment of high
inflation will be a challenge in the remainder of
2018 and beyond.
But research shows that, while facing short- and
medium-term challenges – Egypt’s long-term
economic and trade outlook is largely positive.
20
INTERNATIONAL TRADE REPORT Q1 2017
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