Egypt’s private sector economy outside the oil industry experienced its steepest decline in nearly two years during March, as ongoing Middle East warfare increased business expenses and reduced customer demand, according to a key business survey released Sunday.
The S&P Global Egypt Purchasing Managers’ Index dropped for the fourth month in a row, falling to 48.0 in March compared to 48.9 in February. This marked the weakest performance since April 2024.
The index stayed below the critical 50.0 mark that indicates whether business activity is expanding or shrinking, though it remained close to the survey’s historical average of 48.2.
Production levels and incoming orders were the primary factors pulling down the index, with both measurements reaching their weakest points in almost two years. Companies consistently pointed to the regional conflict as reducing customer demand, particularly as it intensified pricing pressures.
For the first time, business outlook for the next year turned negative, with firms pointing to war-related uncertainty as a primary source of pessimism, although the level of concern was characterized as moderate.
Despite the decline, David Owen, senior economist at S&P Global Market Intelligence, observed that “the latest figure of 48.0 still relates to annual GDP growth of around 4.3%,” and noted that “recent data suggests the domestic non-oil sector is on a solid underlying growth path.”
Rising expenses continued to pose significant challenges for businesses. Input costs jumped at their steepest rate in 18 months, with companies reporting higher fuel expenses and other war-driven commodity price increases, made worse by a strengthening U.S. dollar.
Companies responded by increasing their prices at the quickest pace in 10 months, although the overall price hikes remained relatively small.
