Egypt’s non-oil private sector business activity shrank at its sharpest pace in three months in September amid contractions in new orders and outputs, but companies were optimistic that growth will pick up in the coming year, a survey showed on Tuesday.
The Emirates NBD Egypt Purchasing Managers’ Index (PMI) for the non-oil private sector slipped to 47.4 in September from 48.9 in August, remaining below the 50 mark that separates growth from contraction. The output sub-index declined to 46.5 in September from 48.8 a month earlier, the survey showed, while new orders declined to 48 from 49.5 in August.
New exports declined for the first time since March, with the sub-index falling to 48.5 from 53.7 a month earlier, ending a five-month trend of growth attributed to the floating of the Egyptian pound in November, which saw it lose half its value.
“Improving export demand had been the one bright spot in the PMI surveys over the last few months, but unfortunately this seems to have reversed in September,” said Khatija Hague, head of MENA Research at Emirates NBD.
The report noted an upturn in confidence among non-oil sector companies, with positive sentiment at its highest level in 15 months and two-thirds of respondents expecting output growth in the coming year.
“Anticipated currency stability and an expected economic upturn were the main reasons cited by monitored firms as likely to support output growth in the year ahead,” the report said.
Egypt’s economy has been struggling to recover since a 2011 uprising scared tourists and investors away, two main sources of foreign currency, but a three-year IMF program is expected to help restore confidence in the north African country.
“Both output and total new orders fell at a faster rate in September as domestic demand remained weak. However, businesses were more upbeat about the outlook for the coming year, with expectations for a more stable currency and lower inflation,” Hague added.