RIYADH: Egypt’s non-oil economy continues to be under strain amid sliding business sentiment as the country’s Purchasing Managers’ Index stood at 47.7 in October, slightly up from 47.6 in September, according to the latest report from S&P Global.
The rating agency considers a PMI score above 50 marks as growth, while those below 50 signal contraction.
The trend stretches the current sequence of deterioration to just under two years as the headline index was still below its long-run average despite ticking up to the highest since February, the report added.
This comes as Egypt’s business optimism among non-oil firms slid to its lowest in over a decade of survey data in October, as only 4 percent of firms gave a positive outlook for the next 12 months.
S&P Global noted that rising prices, supply problems and weak global demand also served to drive new business and activity lower.
“Egypt remains heavily impacted by the war in Ukraine, particularly in the tourism sector, as well as industries constricted by the government’s import ban in place since March in a bid to conserve US dollar reserves,” said David Owen, an economist at S&P Global Market Intelligence.
He added: “Several businesses reported that import restrictions had pushed material prices even higher, adding to upticks in energy and food commodity prices recorded since the war began.”
The inability of firms to acquire inputs, in addition to the rise of the costs of raw materials and the lack of new orders, contributed to the decrease in output and the contraction in purchasing activity in October, despite it being a softer drop than the month before.
On the other hand, suppliers’ delivery times witnessed an improvement for the first time in a year showing the economy’s modest recovery since the start of the Russia-Ukraine war.
As for Egypt’s foreign reserves, the country’s saw an increase by $214 million month-on-month at the start of the third quarter compared to a $56 million increase the month before, according to the Central Bank of Egypt.
Egypt’s foreign reserves reached $33.4 billion in October up from $33.197 billion in September marking the first increase since the beginning of the war in Ukraine, noted the CBE.