Activity in Egypt’s non-oil private sector shrank for the twenty-eighth month in a row last March due to continuing restrictions on imports, currency and trade, a survey published by Reuters news agency showed on Tuesday. High inflation.
Economists believe that the real estate and automobile sectors in Egypt are the most affected, and they clarified that real economic growth does not depend only on monetary policy and central bank decisions, but on the implementation of several financial and structural reforms. Increase domestic production.
Reuters reported that Standard & Poor’s Global’s Purchasing Managers’ Index for Egypt fell to 46.7 in March from 46.9 in February, below the 50.0 level that indicates growth in activity.
Economist Khaled El-Shafee commented on the “Standard & Poor’s Global” indicators in an interview with the “Al-Hurrah” website, saying that Egypt’s return to a ratio of 46.7 “represents a further strong decline in private sector performance. The sector and non-oil companies, a significant decline in economic activity and It adds that this is a “natural effect” due to the volume of new business.
Al-Shafi explained that the private sector in Egypt has been suffering from a recession for several months, due to inflation of more than 40 percent last March and a deficit in the balance of trade between exports and imports.
Al-Shafee believes that the crisis in Egypt is not only the result of local pressures, but also an extension of global crises starting with the coronavirus pandemic and going beyond Russia’s war on Ukraine.
According to Reuters, despite the halving of the Egyptian pound’s value from March 2022, Egypt is still suffering from a shortage of foreign currencies, with Egypt receiving a $3 billion support package with the International Monetary Fund last December.
Data from the Egyptian government’s Central Agency for Public Mobilization and Statistics showed core inflation rose to a five-and-a-half-year high of 31.9 percent in February from 25.8 percent in January, while core inflation rose to 40.26 percent.
The PMI sub-index for total input prices rose to 62.8 from 62.7 in February, while the purchase price index rose to 64.3 from 63.9, Reuters reported.
“Sharp inflationary pressures and weak customer demand continue to negatively impact the non-oil business, mainly due to a sharp decline in new orders,” S&P Global noted.
The sub-index for new orders fell to 44.3 in March from 44.7 in February, while output strengthened to 44.9 from 44.6.
And “Standard & Poor’s Global” said, “In March, production levels in the non-oil private sector fell significantly due to continued difficulties with import restrictions and currency controls.”
Speaking to the “Al-Hurrah” website, economist Imad Abdel Halim said, “The latest data reveals that the continued decline in the non-oil sector, particularly in real estate and car sales, has seen widespread volatility in the markets. Continued price hikes and the light of the dollar and import crisis.”
Markets in Egypt are “volatile, things have gotten to the point where no one knows how to set prices,” Abdel Halim said, citing widespread expectations among real estate workers to set prices in dollars.
Abdel Halim pointed out that Egypt is suffering from stagnation in real estate sales, rising prices and increasing supply, as opposed to declining income and purchasing power of citizens.
As for the auto sector, Abdel Halim explained, “No one knows when the import crisis in Egypt will end, so the crisis is that there are no clear economic indicators for car dealers to set prices.”
He said, “Import restrictions and dollar shortages have put pressure on dealers and distributors to import cars or spare parts, prompting many international car manufacturers to stop their sales in the Egyptian market.”
Abdel Halim believes that in Egypt “there is no other solution but to increase production, support and simplify procedures,” and he gave an example of the difficulty of setting up a factory, saying that it takes “648 working days to get a factory permit in Egypt. By counting holidays, it takes 3 to 4 to set up a factory.” It takes years.
In the same context, al-Shafi’e spoke of a crisis between the performance of the government and the private sector, saying that the government “no longer reflects the private sector, its problems and needs, and it cannot. It must address the outstanding problems that have caused the shrinking performance of the non-oil private sector.”
Reuters reported that a sub-index for future manufacturing expectations improved to 54.2 in March from 52.5 in February, “but remains at an all-time low.” He mentioned that employment opportunities have also decreased.
And “Standard & Poor’s” said, “Although expectations for future output rose to their highest level in three months, the outlook for activity for the coming year is still the weakest on record since 2012.”
The economist called for balanced solutions between the government, the private sector and the interests of citizens rather than one side bearing the burden of the crisis.
Al-Shafee spoke about the expectations of the expected government changes to create a unified economic vision to help Egypt recover from the burden of the economic crisis.
Al-Shafi’i emphasized the importance of creating balance in the market and the need to implement the work of regulatory bodies by increasing production and hiring more workers, rather than selling successful factories and companies.
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