Egypt Non-Oil Private Sector Contracts at Fastest Pace in Two Years

Business activity in Egypt’s non-oil private sector contracted at its fastest pace in two years in March, according to the latest Purchasing Managers’ Index released by S&P Global.

The headline index fell to 48 from 48.9 in February, remaining below the 50 threshold that separates growth from contraction for a fourth consecutive month. The survey pointed to weakening demand and rising prices, with output and new orders dropping to their lowest levels since April 2024.

Operating conditions were broadly in line with the long-run average of 48.2. Input costs increased sharply, recording their steepest rise since the end of 2024, driven by higher fuel and commodity prices alongside pressure on the Egyptian pound.

Businesses responded by raising selling prices at the fastest rate in ten months. Inflationary pressures were most pronounced in the manufacturing sector, which saw the sharpest increase in purchase prices among non-oil industries.

The Egyptian pound remained under pressure, trading near EGP 54.4 against the US dollar by the end of last week. Despite weaker demand, purchasing activity showed a slight uptick after two months of decline, while employment levels remained broadly stable following earlier job cuts.

Business sentiment weakened during the month, with some firms expecting output to decline over the coming year amid ongoing geopolitical uncertainty. Separately, the International Monetary Fund approved around USD 2.3 billion in financing for Egypt under its Extended Fund Facility.

The IMF expects economic growth to reach 4.7% in the 2025/2026 fiscal year, rising to 5.7% over the medium term, while cautioning that delays in policy implementation could affect efforts to stabilise inflation and address fiscal pressures.