Non-oil private sector activity in Egypt slows to 47.4

CAIRO – May 9, 2024: According to the latest S&P Purchasing Managers’ Index™ (PMI) survey data, non-oil private sector activity in Egypt slowed in April 2024. The PMI fell to 47.4 from 47.6 in March, indicating further reduction in economic activity at the beginning of the second quarter.

The survey showed a significant easing of inflationary pressures in April. This was attributed to recent policy measures to improve the availability of foreign currency. Greater availability of foreign currencies, combined with hopes for exchange rate stability, lower prices and better availability of materials, has increased confidence among non-oil companies about their business prospects for the coming year.

“Exchange rate liberalization has led to a decline in the formal exchange rate of the pound against the US dollar, but with companies reporting greater availability of foreign currency, we have actually seen a slowdown in the growth of purchasing costs due to an imbalance between supply and demand in the FOREX market. In turn, average prices of goods and services rose much more slowly in April, which could translate into lower overall inflation in the coming months, said Phil Smith, deputy director of economics at S&P Global Market Intelligence.

Despite a slight easing in the pace of decline for the second month in a row, economic activity remained below average since September 2021. Panelists pointed out that weak demand conditions, high prices and volatile exchange rates are limiting the number of new orders. However, the number of new export orders remained essentially unchanged.

Moreover, companies reduced their purchasing activity in April, in line with the trend observed since the beginning of 2022. Although there were some delays in the delivery of purchases, supply disruptions decreased for the second month in a row and were only marginal overall. Purchase inventories were increased, although only slightly.