Egypt’s non-oil sector growth stabilised in January after worsening in December as output and new orders remained steady, according to a key gauge of the economy’s health.
Emirates NBD’s Egypt Purchasing Manager’s Index rose to 49.9 from 48.3 in December, the lender said on Monday. A reading above 50 suggests that the non-oil economy is growing, while a reading below 50 suggests a contraction. The survey is sponsored by Emirates NBD and produced by IHS Markit, a financial information services company.
“While Egypt’s headline PMI reading remained just shy of the 50.0 neutral mark in January, the signs are encouraging as we begin 2018,” said Daniel Richards, a Mena economist at Emirates NBD. “A pick-up in new export orders in particular stands as an indication that the difficult economic reforms enacted in late 2016 are starting to pay off.”
Egypt, the Arab world's most populous country, has taken measures to help bolster its economy which was hurt by the 2011 uprisings and ensuing political upheavals which crimped growth, widened the fiscal deficit and created a dollar shortage. The reforms, which include devaluing the currency in 2016 and hiking energy prices, helped Egypt secure a $12 billion aid package from the IMF that addresses some of the country’s economic woes.
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“Marginal” growth in new export orders bolstered the non-oil sector in January amid a strong demand for Egyptian goods and services from international markets.
Firms beefed up their purchasing activity in January, recording the highest rate of expansion since August 2014.
“Companies retained optimism towards the 12-month outlook for output,” said the bank. “Furthermore, the degree of positive sentiment was stronger than the series average. Anticipated improvements in demand conditions and market stability were cited as the key factors behind optimism.”