Egypt Watch

Deflation hits non-oil private sector in Egypt

The activity of the non-oil private sector has declined in Egypt, with the continued impact of inflationary pressures on business, according to the Purchasing Managers’ Index, which scored 48.1 points, slightly higher than the 47.9 level in January, to continue the state of deflation, and thus completes 15 continuous months at a level of less than 50 points.

The index released by the IHS Markit witnessed a decline in production, employment, new business and purchases on the back of the rise in the prices of intermediate goods.

The Purchasing Managers’ Index report showed that Egyptian non-oil producing companies recorded a strong decline in business conditions, stressing that price pressures affected business confidence and consumer spending. As well, production levels fell sharply, while the purchase of production inputs and employment continued to decline.

According to the report, the surrounding concerns about the economic conditions and expectations led to the decline in confidence levels to the lowest and weakest levels in the index’s history. IHS Markit economic analyst David Owen believes that there is a continuous increase in input prices, which has hindered the recovery of the economy in the first quarter of 2022.

Inflation continues to cast a shadow over the business. Production declined in response to weak sales, according to the report, which also attributed the drop in demand to a rise in prices.