Egypt non-oil sector growth sluggish as pound weakens
Egypt’s non-oil private sector continues to witness sluggish growth on the back of worsening business conditions coupled with sharp fall of Egyptian pound against the US dollar.
The sector saw the most marked contraction in over two-and-a-half years driven by sharper declines in output, new orders and employment, according to the latest by Emirates NBD Egypt purchasing managers index (PMI)
The country’s non-oil sector has been witnessing the weakness for the last six months.
Pound’s sharp drop against the US dollar was cited as a factor restricting new work, and it also contributed to a steep rise in purchasing costs, the survey produced by Markit noted. Subsequently, charges rose to the greatest extent in nearly three years.
“The deterioration in business conditions is not entirely surprising as the survey took place at a time of elevated uncertainty that coincided with the devaluation of the EGP. Looking ahead, we believe that the move to a more competitive exchange rate has now reduced a key source of risk, and could therefore set the stage for a broader economic recovery in the second half of 2016, says ” Jean-Paul Pigat, Senior Economist at Emirates NBD.
Experts have been urging to remain cautious to the uncertainty surrounding the Egyptian economy, particularly the exchange rate.