Egypt’s non-oil business sector yet to gain from IMF deal, PMI shows

CAIRO (Reuters) – An expanded IMF agreement and major investment by the UAE provided little relief to Egypt’s non-oil private sector in March, a survey showed on Wednesday.

The S&P Global Purchasing Managers’ Index (PMI) for Egypt inched up to 47.6 in March from 47.1 in February but remained below the 50.0 threshold that separates growth from contraction for a 40th straight month.

“Activity across the non-oil private sector declined sharply over the course of March, as weak order books and elevated inflationary pressures continued to hit business output and confidence,” S&P Global said.

Egypt signed an agreement with the International Monetary Fund on March 6 to expand a December 2022 financing package to $8 billion from the original $3 billion, with an initial $820 million payout expected this week.

Egypt devalued its currency and hiked interest rates by 600 basis points to coincide with the IMF deal.

The expanded agreement was in response to shocks to the Egyptian economy from the crisis in neighbouring Gaza and followed a $35 billion investment deal with Emirati sovereign fund ADQ.

The output sub-index climbed to 44.5 in March from 44.3 in February, the new orders index rose to 45.0 from 44.6, but business sentiment weakened.

“Sentiment towards future activity ticked down in March and was among the weakest levels recorded in the series history,” S&P Global said. “While firms remained positive about the next 12 months, there were some concerns that economic conditions will remain depressed and bring sales down further.”

(Reporting by Patrick Werr; editing by Christina Fincher)

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