Growth of Egyptian private sector activity due to export contracts

A survey released on Monday revealed growth in non-oil private sector activity in Egypt in July.

Emirates NBD's Purchasing Managers' Index for the non-oil private sector in Egypt went from 49.2 in June to 50.3 in July, reaching the 50th level between growth and contraction.

The new production index and new supply orders, which account for more than half of the index's weighting, led to the sub-index improving to 51.0 in July and new orders to 50, 4.

"The notable factor is the increased number of contracts with foreign customers, which has resulted in the first increase in new orders for export since August 2018," said David Owen, economist at IHSmarket.

"The increase in demand from a number of countries indicates that Egyptian companies are improving their competitiveness."

A $ 12 billion loan program from the International Monetary Fund (IMF) to Egypt is linked to reforms aimed at reviving the economy after years of political turmoil.

Egypt received $ 2 billion, the last tranche of the IMF loan on July 24.

"Optimism about future output growth improved in July," said Owen. Some companies predict a short-term appreciation of the Egyptian pound, as the value of the dollar may fall due to interest rate cuts. "

"Overall, companies are generally optimistic about future economic conditions."

The Egyptian pound has risen 7% against the dollar since the beginning of the year.

Egypt is aiming for a 6% growth for the 2019-2020 fiscal year, which began in July, a goal slightly above 5.6% for the 2018-2019 fiscal year.