Creating new perspectives since 2009

Egypt: private business sector shrinks for 25th consecutive month

January 4, 2023 at 2:12 pm

Stock market brokers work at the Egyptian Stock Market in the capital Cairo on January 6, 2013. [KHALED DESOUKI/AFP via Getty Images]

A new survey shows that the non-oil private business sector in Egypt shrunk in December for the 25th consecutive month. The data published today suggests that the sector is under pressure from inflation, a weak currency and continued restrictions on imports.

The S& P Global Purchasing Managers’ Index (PMI) for Egypt rose to 47.2 in December from 45.4 in November, but remained below the 50 threshold that separates growth from shrinkage. The production sub-index rose to 44.8 from 40.8 in November, and the new orders sub-index rose to 45.5 from 41.4.

“According to survey panellists,” explained S&P Global, “lower activity generally reflected weak demand conditions, as rising prices led customers to make additional cuts to spending.”

The shrinkage was caused by the high cost of materials and continued restrictions on imports, among other issues.

Egypt suffers from a severe shortage of foreign currency despite the devaluation of the Egyptian pound by 14.5 per cent in October and the announcement of a $3 billion support package from the IMF. The foreign currency shortage restricted factory and retail imports.

The Central Agency for Public Mobilisation and Statistics said last month that inflation in Egypt jumped to a five-year high of 18.7 per cent in November. The sub-index for future output expectations rose to 56.9 from 55.7 in November. It was the highest reading since June.

READ: US awards Boeing $426m contract to produce Chinook helicopters for Egypt