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Egypt non-oil activity continues to shrink, with weak outlook

Reuters/Amr Abdallah Dalsh
Handmade traditional souvenir clothes are displayed for sale in a popular tourist area in old Islamic Cairo.

Non-oil private sector activity in Egypt shrank for the 21st month running in August, and businesses took a bleak view of the year ahead amid concerns over the currency, Ukraine and import bottlenecks, a survey showed on Monday.

The S&P Global Egypt Purchasing Managers’ Index (PMI) improved to 47.6 from July’s 46.4, but remained below the 50.0 line that denotes growth.

“Businesses showed little optimism towards future activity, as expectations slipped to the second-lowest on record,” said S&P Global economist David Owen.

“Monetary policy uncertainty, a weakening exchange rate, and the continued war in Ukraine mean there are still high levels of risk for the economy over the rest of 2022,” Owens said.

Shrinking output in August extended the contraction there to a full year, although the related subindex at 45.8 improved from July’s 43.6. The new orders subindex improved to 45.1 from 43.1.

“There were reports that a lack of raw material supply had constrained total output in August, exacerbated by recent import regulations and the war in Ukraine,” S&P Global said.

The subindex for future output expectations fell to 53.5 from 56.1 in July, close to an all-time low of 52.5 percent recorded in March and the second lowest in the decade since the question was first included in the survey.