Egypt’s non-oil private sector contracted at its highest rate since the outbreak of the Coronavirus pandemic in early 2020, owing to the weak currency, which increased the cost and availability of foreign goods.
The country’s S&P Global Purchasing Managers’ Index (PMI) fell to 45.4 in November from 47.7 in October, well below the 50.0 threshold separating growth and contraction.
This is the second lowest reading since the pandemic caused the index to fall in June 2020, marking the 24th month of contraction.
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“The pound’s depreciation against the US dollar led to a marked increase in prices paid for raw materials, which have already been exacerbated by import restrictions since early 2022,” said S&P Global economist David Owen.
The PMI’s sub-indices for both overall input prices and purchase prices deteriorated to 72.4, their highest since July 2018, from October’s 63.5.
The sub-index for future output expectations improved to 55.7 after falling to a record low of 52.2 in October.
“Concerns about high inflation, rising interest rates, currency weakness, and a global economic slowdown remained dampeners on sentiment,” S&P said.
Despite a 14.5 percent devaluation of the Egyptian currency on October 27 and the announcement of a $3 billion support package with the International Monetary Fund (IMF), the Egyptian economy is suffering from a lack of foreign currency. Imports of factory inputs and retail goods were restricted due to a dollar shortage.
