Higher costs, weak demand hit Egypt’s private sector
Output continue to decline for the third month in a row, says IHS Markit
Egypt’s private sector experienced a downturn in November due to rising costs and weaker demand, according to IHS Markit.
The Purchasing Managers’ Index hit 48.7 in November, the 12th consecutive month in which the North African country was below 50.
Production levels in Egypt’s private sector were down in November. Output has now slipped for the third month in a row, the London-based firm said.
Following four months of jumps, employment was down during the month as new orders in the North African country declined.
“Inflationary pressures and supply shortages were again the most prominent depressors of Egypt’s non-oil economy in November,” David Owen, economist at IHS Markit, said.
Selling prices were on the rise as the inflation rate fell marginally from its 38-month high in October. This prompted firms to mark up their prices by over 10 percent to safeguard their profits.
Egypt had been hoping for growth between 6 and 6.5 percent before the coronavirus crisis broke out.
The country topped the emerging market economies in containing the rate of inflation during the current year, according to data from the Egyptian Cabinet, despite the global repercussions of the health emergency.
The International Monetary Fund said that Egypt achieved the largest annual decline in the inflation rate in emerging markets in 2020, compared to 2019, with a decline of 8.2 percentage points.
Among the effects of the economic reform plan were inflation rates falling to 5.7 percent during 2019-2020, compared to 13.9 percent in 2018-2019.
According to Egypt’s Finance Minister Mohamed Maait, the estimated rate of economic growth in the fiscal year 2021-2022 would reach between 2.8 and 4 percent.
He said the percentage varied according to how each person perceived it sectorally, and that industries such as tourism and aviation were significantly affected by the spread of the disease.
“We have a priority to make room for the private sector’s participation in development projects,” the minister added.