Egypt’s non-oil private sector carries on contraction in March

Updated 4/4/2023 8:11:00 AM

Arab Finance: Activity and new orders of Egypt’s non-oil private sector shrank in March for the 28th month in a row amid persisting inflationary pressures, according to the S&P Global Egypt PMI™ survey posted on April 4^th.

The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) fell marginally to 46.7 in March from 46.9 in February, which is still below the 50 threshold that indicates growth in activity.

"At 46.7, the headline PMI signaled a further solid deterioration in the performance of non-oil companies, driven by steep falls in activity and new business volumes," Senior Economist at S&P Global David Owen said.

Output levels in the non-oil private sector fell sharply in March, partially due to ongoing difficulties in obtaining key inputs due to import controls and currency restrictions, S&P Global said.

The year-ahead outlook for activity rose to a three-month high; however, it remained among the weakest recorded since the series began in early 2012, the survey added.

The survey also mentioned that firms attributed soaring inflation to a depreciation in the Egyptian pound against the US dollar, which added to import prices, with staff costs increasing, albeit by the least amount in three months.

“Furthermore, the pace of output charge inflation slowed to a five-month low, as companies pulled back on price hikes in a bid to stimulate demand. In addition to a slightly stabler currency market, the data provides some hope that the peak of inflation could be near," Owen highlighted.

In February, Egypt’s annual headline inflation rate rose to 32.9%, compared to 10% in the same month of 2022, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).