Egypt BoP: Different policy response, better results

Research evidence excerpt

Egypt BoP: Different policy response, better results

J P M O R G A N MENA Economic Research

14 July 2026

Egypt BoP: Different policy

response, better results

EM, Economic and Policy Research

Francesco Arcangeli

(44-20) 3493-0971

francesco.arcangeli@jpmorgan.com

Gbolahan S Taiwo

• BOP picture remained resilient in 1Q26, despite a wide current account (44-20)gbolahan.taiwo@jpmorgan.com3493-3412

deficit and sizeable portfolio outflows during the Iran conflict. J.P. Morgan Securities plc

• FDI inflows and large positive errors omissions helped keep the basic

balance broadly intact.

• Exchange rate flexibility acted as a key shock absorber, facilitating

adjustment and containing external pressures.

• Egypt's external outlook will remain susceptible to global and regional

market swings.

CBE adopts a new playbook to manage shock and ease BoP pressures

Egypt's external accounts came under significant pressure in 1Q26, with the

current account posting a wide US$5.1bn deficit while portfolio flows recorded

substantial net outflows (US$9.5bn) amid the sharp rise in global and regional risk

aversion following the US-Iran conflict. Despite these pressures, Egypt weathered

the episode relatively well. In particular, the basic balance remained broadly

balanced, as the current account deficit was largely offset by resilient FDI inflows

and a very large positive errors and omissions item, possibly providing further

evidence of local de-dollarization. Crucially, the adoption of a flexible exchange

rate regime appears to have helped contain the scale of portfolio flow reversals and

local dollarization by reducing concerns about a disorderly adjustment and

preserving confidence in the policy framework. The resulting portfolio outflows