Key Egyptian Business Index Expands for First Time Since 2020
(Bloomberg) -- Activity in Egypt’s non-oil private sector expanded for the first time in almost four years, signaling a fragile recovery may be taking hold after the North African nation’s worst economic crisis in decades.
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The Purchasing Managers’ Index compiled by S&P Global rose to 50.4 in August from 49.7 the month before, finally edging above the 50-mark that separates growth from contraction. The highest rating since November 2020 was calculated by measuring factors including new orders, output and job hirings.
The figures are the latest indication of a turnaround of fortunes for the Middle East’s most populous nation, where the economy was on the brink until a $57 billion global bailout led by the United Arab Emirates and International Monetary Fund helped turn things around.
Authorities hiked interest rates and let the pound plunge nearly 40% against the dollar in March, seeking to resolve a chronic foreign-currency shortage and unlock foreign funding after about two years of uncertainty.
“Business conditions are on the mend,” David Owen, senior economist at S&P Global Market Intelligence, said Tuesday in a statement.
The report said businesses raised their output levels for the first time in three years, while companies also expanded their inventories and hired additional staff.
But Owen warned the situation was mixed, with many firms still suffering from weak consumer demand and seeing a slight drop in total new orders. Rising input costs are another challenge, with input-price inflation accelerating for a third month in August largely due to the weaker pound. Egypt’s inflation has slowed since February following the rate hike, but it still almost 26% year-on-year.
In recent weeks, the government has raised prices of fuel products by as much as 15% and increased power tariffs. This “has the potential to limit spending and weaken the market recovery,” Owen said.
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