Egypt's non-oil private sector grows for the second time in 2019: Report

The Egyptian pound currency has already strengthened nearly seven percent against the dollar since the beginning of the year. (File photo: Reuters)

Activity in Egypt's non-oil private sector grew slightly in July, a survey showed on Monday, its first expansion since April and only the second of 2019.

IHS Markit's Purchasing Managers' Index (PMI) for the non-oil private sector strengthened to 50.3 in July from 49.2 in June, moving above the 50.0 threshold that separates growth from contraction.

Sub-indices for output and new orders, which account for over half the index's weighting, also both improved. Stronger activity in July pushed output to 51.0, the second expansion in 20 months, while new orders edged up to 50.4.

“A noticeable factor was an increase in contracts from foreign clients, leading to the first rise in new export orders since August 2018,” IHS Markit economist David Owen said.

“The rise in demand came from a number of countries, signaling that Egyptian businesses are growing in their competitiveness on trade,” said Owen.

Egypt's three-year $12 billion loan program with the International Monetary Fund, the final $2 billion tranche of which was disbursed on July 24, is tied to tough reforms aimed at reviving the economy after years of political turmoil. They have included a currency devaluation, deep cuts to energy subsidies and the introduction of a value-added tax.

“Optimism toward future output growth improved in July. Some firms based their outlook on hopes of a strengthening Egyptian pound in the near-term as the US dollar may fall in value through interest rate cuts,” Owen said.

“Overall, firms are generally positive when regarding the future condition of the economy,” Owen added.

The Egyptian pound currency has already strengthened nearly seven percent against the dollar since the beginning of the year.

Egypt is targeting growth of six percent in fiscal year 2019/2020, which began in July, slightly more than the 5.6 percent targeted in 2018/2019.

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Last Update: 06:52 KSA 09:52 - GMT 06:52
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