A survey conducted on Tuesday revealed that for the 28th consecutive month, non-oil private sector activity in Egypt has continued to decline due to restrictions on imports and currency, as well as a significant increase in inflation, which has adversely affected companies.
The S&P Global Egypt PMI ticked down to 46.7 in March 2023, from 46.9 in the previous month, remaining firmly beneath the 50.0 neutral mark.
David Owen, Senior Economist at S&P Global Market Intelligence, said that at 46.7, the index indicates a further decline in the performance of non-oil companies due to a sharp drop in activities and new business volumes.
In December, Egypt signed a new $3 billion rescue package with the International Monetary Fund to address its foreign currency shortages.
In February, the inflation rate in Egyptian cities reached its highest level in five and a half years, rising to 31.9% from 25.8% in January, according to data from the Central Agency for Public Mobilization and Statistics. Core inflation also surged to 40.26%.
In March, the sub-index for overall input prices in the PMI rose slightly to 62.8 from 62.7 in February, while the purchasing prices index increased to 64.3 from 63.9.
According to S&P Global, new orders further deteriorated, as steep inflationary pressures and drop in client demand negatively influenced the non-oil businesses.
In March, the sub-index for new orders in the PMI fell to 44.3 from 44.7 in February, while the sub-index for production increased slightly to 44.9 from 44.6.
At the same time, output remained contracted although slightly eased and the softest for five months, partly because of the ongoing difficulties with accessing key inputs to import controls and currency restrictions.
The sub-index for future production expectations increased to 54.2 in March from 52.5 in February, but it remained near its all-time low.
Finally, firms continued to show little optimism, despite picking up to a three-month high, the year-ahead activity was still among the weakest since records began in early 2012.
