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Egypt private sector activity shrinks as Ukraine war takes toll

Activity in Egypt’s non-oil private sector shrank in March at its fastest since the early
months of the coronavirus pandemic as fallout from the Russian invasion of Ukraine hit businesses and fuelled costs, a survey showed on Tuesday.

The S&P Global Egypt Purchasing Managers’ Index slid to 46.5 from February’s 48.1, its 16th month below the 50.0 threshold that separates growth from contraction.

“The non-oil economy was clearly hit by the effects of the Russia-Ukraine war during March, with firms often seeing clients pull new orders back amid increased prices and economic uncertainty,” said S&P Global economist David Owen.

Higher global food and raw materials prices led to sharp decreases in output and new orders, with the sub-index for overall input prices climbing to 58.6 from 54.5 in February and that for purchase costs rising to 59.1 from 55.9.

“Egyptian firms reacted to higher prices and lower demand by severely reducing their purchasing activity at the end of the first quarter,” S&P Global said.

“More than a third of respondents reported a decrease in input buying, marking the sharpest decline in overall purchases for almost two years.”

Output and new orders in March extended a months-long contraction, with the output index dropping to 44.6 from 46.1 in February and that for new orders falling to 45.1 from 47.3.

The sub-index for future output expectations tumbled to 52.5, its lowest since it was first included in the survey in April 2012, from 55.4 in February.