Egypt Business Activity Worsens But Vaccine Seen Fueling Revival

(Bloomberg) --

Business activity in Egypt’s non-oil private sector worsened in March amid weak demand, although a rollout of vaccinations is boosting hopes of a revival later in 2021.

The IHS Markit Purchasing Managers’ Index fell to 48 from 49.3 in February, remaining below the threshold of 50 that separates growth from contraction for a fourth month. It was the lowest reading since June 2020.

“Client demand remained subdued as new order inflows fell solidly, whilst export sales dropped for the first time in three months” David Owen, an economist at IHS Markit, said in Monday’s report. “Consequently, employment, backlogs and input purchases fell further, although this helped to soften cost inflationary pressures.”

The outlook for future business activity was more positive, with businesses predicting an improvement when “vaccines feed through to a greater reopening of the economy,” he said. Egyptian authorities said Sunday that 148,987 doses of vaccine have been administered so far.

“The expanding of the vaccine program to more demographics played a key part in boosting expectations,” Owen said. “Hopefully this is a sign of improving demand in the near term and a recovery in output in the second half of the year.”

IHS also said:

• Export sales fell for the first time in three months, albeit following a survey-record upturn.
• Overall pace of input-price inflation softened to a nine-month low, leading to another subdued rise in output prices.
• Job losses continued, extending an almost year-and-a-half run.

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