Ahmed Kamel – Egypt Daily News
Egypt’s non-oil private sector activity fell to its lowest level in two years in March, as escalating regional conflicts and domestic economic pressures hit business conditions, according to the latest S&P Global Egypt Purchasing Managers’ Index (PMI).
The headline PMI dropped to 48 in March from 48.9 in February, marking the fourth consecutive month below the 50 threshold that separates growth from contraction. The decline reflects continued softness in demand and rising costs across the sector.
“While March’s PMI corresponds to annual GDP growth of around 4.3%, stronger readings earlier in the first quarter suggest the non-oil sector still has a solid underlying growth path,” said David Owen, Senior Economist at S&P Global.
The survey highlighted a slowdown in output and new orders, which fell to their lowest levels since April 2024. Rising input costs, including fuel and commodity prices, coupled with a weaker Egyptian pound, drove businesses to raise selling prices at the fastest pace in ten months, passing some of the cost burden onto consumers.
“As the US dollar strengthens amid a global flight to safety and energy prices remain elevated, Egyptian companies are feeling the squeeze on their balance sheets,” Owen added.
The Egyptian pound traded near 54.4 per US dollar by the end of last week, reflecting continued capital outflows and external pressures. Input prices surged at the fastest rate in 18 months, with manufacturing sectors hit particularly hard, contributing to weaker new sales. Despite softening demand, purchasing activity ticked up slightly after two months of decline, while employment levels remained broadly stable following cuts in late 2025.
Business sentiment deteriorated as firms expressed caution over the coming year, citing uncertainty tied to geopolitical developments and economic volatility.
The International Monetary Fund (IMF) has also highlighted risks to Egypt’s recovery, warning that failure to implement key policies could undermine inflation stabilization and fiscal sustainability. Under its Extended Fund Facility (EFF), the IMF recently approved $2.3 billion in financing for Egypt and projects GDP growth of 4.7% in the 2025/26 fiscal year, with medium-term growth expected to rise to 5.7% as structural reforms take effect.
While growth prospects remain, the latest PMI figures underscore how external shocks, energy price spikes, and currency pressures continue to challenge Egypt’s non-oil private sector, highlighting the fragile balance between expansion and contraction in a turbulent economic environment.
