Business activity in Egypt shrank for the fourth straight month in January, a survey showed on Wednesday, as new export orders tumbled and output declined for the fourth time in as many months.
Egypt has been struggling to revive its economy since a popular uprising in 2011 and subsequent political upheaval that has driven both investors and tourists away, depriving it of the foreign currency it needs to import raw materials.
The Emirates NBD Egypt Purchasing Managers Index (PMI) for the non-oil private sector slipped to 48.0 points in January from 48.2 points in December, remaining below the 50-point mark that separates growth from contraction.
“January’s survey represents a marginal slowdown from December, with the export sector appearing to be the main source of weakness,” said Jean-Paul Pigat, Senior Economist at Emirates NBD.
The new export order subindex fell to 40.2 points in January from 43.5 points in December, and new orders declined to 47.7 points in January from 48.8 points the previous month.
“A fragile economic climate was cited as one of the drivers of the drop in new business, and this led panelists in turn to reduce their output,” Markit, which compiled the data, said in a report.
The output subindex fell to 46.1 points in January from 48.2 points in December, with around 30 percent of the panel noting a fall, the survey said. Lower output was linked to weaker client demand as well as raw material shortages.
“Mirroring the accelerated reduction in output, new business fell more quickly in January. With more than one-in-four respondents noting a drop in new work,” Markit said.
Egypt has been wrestling with a currency crisis that economists blame on an over-valued pound. The central bank had been gradually weakening the pound but then surprised markets by strengthening it by 20 piasters against the dollar to 7.7301 pounds, still far from the black market rate of 8.7 pounds.
The survey showed declines in employment for the eighth consecutive month although the pace of layoffs slowed, with the related subindex rising to 48.2 points in January from 46.5 the month before.
President Abdel Fattah al-Sisi has pledged to reduce the jobless rate to 10 percent over the next five years. Unemployment stood at 12.8 percent in December, according to the government. Analysts believe it may be much higher.
The economy grew around 4.2 percent in 2014/15 and is expected to grow around 5 percent in 2015/16.
“We expect economic activity to accelerate in the coming months, with our forecast for real GDP growth in FY2015/16 sitting at 3.9 percent,” Emirates NBD’s Pigat said.