Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

Egypt’s output falls sharply amid inflationary pressure as PMI drops to 45.4: S&P Global

RIYADH: Egypt’s non-oil businesses witnessed a marked contraction in operating conditions in November, resulting in output falling at the sharpest rate since the early pandemic as the country continues to face inflationary pressure amid the weakening Egyptian pound, according to S&P Global.

The impact of this was visible in Egypt’s Purchasing Managers’ Index which fell from 47.7 in October to 45.4 in November — the second lowest since June 2020, the report noted.

The rating agency said that the new low extends the current sub-50.0 sequence to two years.

The key reason for this downturn was a rapid decrease in business activity, with S&P research revealing that companies were forced to cut output as they faced accelerated cost rises.

“Egyptian firms faced an immediate hit to demand from a rapid depreciation of the pound since late October, with the November PMI results signaling the worst drops in output and new orders since May 2020,” said David Owen, an economist at S&P Global Market Intelligence.

He said the pound's depreciation against the US dollar led to a marked increase in prices paid for raw materials, which have already been exacerbated by import restrictions since early 2022.

According to S&P Global, Egypt’s purchase price inflation hit a 52-month