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A survey has shown that Egypt’s non-oil private sector activity shrank for the 28th straight month in March 2023 as import and currency restrictions and rising inflation continued to hurt business.
The S&P Global Egypt Purchasing Managers’ Index (PMI) edged down to 46.7 in March from 46.9 in February, well below the 50.0 threshold that marks growth in activity.
S&P Global economist, David Owen said “At 46.7, the headline PMI signalled a further solid deterioration in the performance of non-oil companies, driven by steep falls in activity and new business volumes.”
Despite the Egyptian pound’s half-depreciation since March 2022 and the completion of a $3 billion rescue package with the International Monetary Fund in December, Egypt still lacks foreign money.
According to the state statistics agency, headline inflation increased to a five-and-a-half-year high of 31.9% in February from 25.8% in January, while core inflation increased to 40.26%.
The sub-index for purchase prices increased to 64.3 from 63.9, and that for overall input prices increased slightly to 62.8 from 62.7 in February.
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“Steep inflationary pressures and a drop in client demand continued to negatively impact non-oil businesses, chiefly through a sharp reduction in new orders,” S&P Global said.
The new orders sub-index fell to 44.3 in March from 44.7 in February, while that for output strengthened to 44.9 from 44.6.
“Output levels fell at a marked rate across the non-oil private sector during March, in part due to ongoing difficulties with accessing key inputs due to import controls and currency restrictions,” S&P Global said.
Inventories and employment levels also decreased, S&P Global economist David Owen said.
The sub-index for future output expectations improved to 54.2 from 52.5 in February, still near an all-time low.
“Despite picking up to a three-month high, the year-ahead outlook for activity was still among the weakest recorded since the series began in early-2012,” S&P wrote.
