Egypt’s non-oil private sector grew in January due to an increase in production and sales
Egypt’s private businesses (excluding oil) grew well in January. This was the first growth since August, driven by a big rise in production and sales, according to a business survey on Tuesday.
Non-oil private sector
The business activity in Egypt’s non-oil private sector improved in January. The Purchasing Managers’ Index (PMI) from S&P Global rose to 50.7, its highest in 50 months, from 48.1 in December. A score above 50 means growth, while below 50 means decline.
David Owen, an economist at S&P Global, said the ceasefire deal between Israel and Hamas likely helped boost confidence in January. However, businesses are still unsure about the economy in the long run.
The index for business output increased to 51.1 in January from 47.1 in December. New orders also improved, rising to 51.3 from 46.4.
Employment levels remained stable after two months of job cuts, though hiring was still limited.
The increase in business costs slowed to its lowest level in eight months. Because of this, companies raised their prices only slightly, marking the smallest increase in four-and-a-half years.
Business confidence
Despite the good start to the year, companies stayed cautious about the future. Business expectations dropped to nearly their lowest levels in history. The index for expected future output fell to 52.8 from 53.8 in December.
Inflation slows down
Most industries saw a slower rise in prices compared to December. However, the construction sector went against this trend, reporting lower material costs in January.
Egypt’s yearly inflation rate dropped to 23.4% in December from 25% in November, mainly because food and drink prices decreased.
Inflation had surged in 2022 after Russia’s invasion of Ukraine, which caused foreign investors to pull out billions from Egypt’s financial markets. It hit a record high of 38% in September 2023, rising sharply from 21.3% in December 2022.
Economic growth
Egypt’s economy grew by 3.5% in the first quarter of the 2024-25 financial year, up from 2.7% in the same period last year. This was mainly due to government economic reforms and a recovery in key industries like manufacturing.
The economy is expected to grow by 4% in the financial year ending in June, helped by ongoing support from the International Monetary Fund (IMF), according to a Reuters poll. This matches the 4% growth forecast from Egypt’s Ministry of Planning.
In late January, the IMF announced an agreement with Egypt on the fourth review of its economic support program. This could lead to a $1.2 billion payment to Egypt under the program.
Published: 5th February 2025
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