Egypt’s current account deficit (CAD) widened 20% Q-o-Q and 18% Y-o-Y to USD2.1bn, largely because of a large drop in remittances, data released by the Central Bank of Egypt (CBE) showed. The country’s merchandise trade deficit narrowed 5%, both sequentially and annually, largely on a surplus in petroleum balance, the first in five years, forming the highlight of the data for this quarter. The surplus came as oil imports dropped 27% Y-o-Y, in reflection of lower oil prices, though, on the contrary, petroleum exports were up 58% Y-o-Y, thanks to rising gas exports. The latter managed to improve the trade deficit despite: i) 13% growth in non-oil imports; and ii) anemic 2.5% growth in non-oil exports, an area that has been clearly disappointing for more than two years after a sharp EGP devaluation. Tourism continued its strong performance, showing 25% Y-o-Y growth to USD2.9bn, and Suez Canal revenues were up 7% Y-o-Y. Despite these positive developments, CAD widened in 4Q18, largely because of a 16% Y-o-Y drop in remittances, which came from a very high base; remittances in 4Q17 were at the highest levels on record: USD7.1bn. We, therefore, see this drop in remittances as a normalisation rather than a negative trend. Moving to the capital account, the latter was hit by: i) portfolio outflows of USD2.6bn in light of volatility in emerging markets at the time; and ii) poor FDI numbers, which dropped 9% Y-o-Y. These – together with the delay of the IMF loan payment, which was then received in February – caused the balance of payments to be in the red (USD2.7bn) for the first time in nearly three years.