Remittances from Egyptians abroad jumped 51.3% y-o-y in 2024, reaching USD 29.6 bn — up from USD 19.5 bn in 2023, according to a statement from the Central Bank of Egypt (pdf). Inflows from Egyptians abroad increased as they started sending more of their remittances through official channels after the float of the EGP in March last year put an end to the parallel market that had pushed remittance flows through unofficial channels.

Remittances also continued to pace upward in December, doubling on a y-o-y basis to USD 3.2 bn — an all-time high for the month. On a monthly basis, remittances rose 24.5% compared to the USD 2.6 bn recorded in November.

Rising inflation could have played a part: “I believe that the significant increase in inflation over the past two years may have prompted workers abroad to increase the remittances they send to their families to help them cope with the rising cost of living,” Al Ahly Pharos Senior Economist Esraa Ahmed told us.

REMEMBER- Annual headline urban inflation dipped to 24.0% in January, marking a marginal 0.1 percentage point drop from December. The figure marks the nation’s lowest inflation reading since December 2022 when inflation recorded 21.3%, which marked the beginning of an upward trend that has been slowing down for three consecutive months. The central bank decided to extend its inflation targets last December to an average of 7% ±2 percentage points by 4Q 2026 and 5% ±2 percentage points by 4Q 2028.

We had been expecting the monthly drop in November to be a blip: The one-off drop recorded in November compared to the previous month should be little cause for concern, economists and analysts told EnterpriseAM last month, including economist Mona Bedeir, who told us that a “slight monthly decline” should only worry us if it “sustains for the next few months.” HC Securities’ Heba Mounir agreed with Bedeir, noting that “it is just a one-off drop, and should not be considered alarming as long as there is no trend.”

Remittance money makes up a big chunk of our GDP: Remittances are expected to have made up 8% of the country’s entire GDP in 2024, up from 5% in 2023 and 6.1% in 2022. In terms of current account inflows, Egyptians abroad sending FX home are expected to account for 35% of inflows in 2024, up from the 25% recorded the year prior, but still a long way off the 45% recorded in 2020 before remittance inflows starting falling with the onset of the FX crisis and appearance of the parallel market taking remittance flows away from official channels.

Egypt is in need of an uptick in remittances, especially considering the roughly USD 7 bn drop in Suez Canal revenues last year spurred on by Houthi attacks on passing vessels that saw the world’s major shipping lines reroute around the Cape of Good Hope. Aside from Suez Canal revenues, increased remittance inflows would help reassure policymakers that there are still other sources of FX it can tap to fund commodity imports, meet external debt obligations, keep the parallel market at bay, assure investors they can repatriate earnings, and improve FX liquidity and by extension the stability of the EGP.

The rebound could be happening soon: Remittances are expected to surpass pre-2022 levels during the current fiscal year, with Morgan Stanley forecasting USD 32 bn in inflows from workers residing abroad in FY 2024-25 (amounting to around USD 8 bn per quarter).

Other sources of revenue have begun to recover as well: Revenues from the tourism sector rose 8.2% y-o-y to USD 4.8 bn in 1Q FY 2024-2025, with the number of tourist nights spent in Egypt up 8.2% y-o-y to 51.6 mn. Meanwhile, Suez Canal Authority head Osama Rabie said this week that 47 ships changed course this month to pass through the Suez Canal instead of sailing around the Cape of Good Hope, and said earlier that he sees Suez Canal traffic gradually normalizing by late March and fully recovering by mid-year.

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