Egypt Business Conditions Worsen

Egypt’s non-oil private sector firms reported ongoing difficulties in September, as business conditions worsened for the twelfth straight month, according to the latest Emirates National Bank of Dubai Purchase Managers’ Index.

Chief among these issues was falling output–the rate of decline accelerated and was marked. Client demand deteriorated both at home and abroad, linked to the general economic downturn and spiking inflation, TradeArabia quoted the survey report.

In fact, high prices continued to hamper the sector as a whole. Currency weakness relative to the dollar and a newly introduced value-added tax led to faster rises in both input and output prices. This contributed to a lack of new work, and also motivated a number of companies to cut back on staff. Employment fell at a similar pace to August’s survey record.

The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.

The headline seasonally adjusted Emirates NBD PMI dropped to 46.3 in September, from 47.0 in August.

As well as marking a one-year downturn, the latest reading pointed to an accelerated contraction for the second straight month. That contrasted with the picture at the start of the third quarter, when the index had shown tentative signs of recovery by edging closer to the neutral 50.0 threshold (48.9).

Jean-Paul Pigat, senior economist at Emirates NBD, said: “The introduction of a value added tax appears to have played a role in curbing output and pushing inflation higher in September. While many of the economic reforms expected in Q4 will ultimately prove beneficial for long-term stability, in the near term they could result in a further deterioration in business conditions for the private sector.”