Egypt's Private Sector Shrinks for 41st Month Amid IMF Deal and UAE Investment; Employment Falls and Business Activity Contracts
Egypt's non-oil private sector continued to contract in April, despite recent investment deals with the UAE and the IMF.
The S&P Global Purchasing Managers’ Index for Egypt decreased to 47.4 from 47.6 in March, remaining below the 50.0 threshold indicating growth for the 41st consecutive month.
Business activity declined, leading to a drop in employment, which slipped to 49.7 from 50.8 in March.
Egypt signed an $8 billion agreement with the IMF in March and received the first $820 million payout in April, with a second payment expected after a review in June.
The International Monetary Fund (IMF) provided financial support to Egypt, citing economic shocks from the crisis in Gaza.
In response, Egypt devalued its currency and raised interest rates.
The economy showed signs of improvement with an increase in output and new orders, as well as improved business sentiment.
Global ratings agency Fitch revised Egypt's outlook to positive, citing reduced financing risks and increased foreign direct investment.
Since the IMF loan announcement, foreign investors have invested heavily in Egyptian treasury bills.
Egypt's net foreign assets deficit decreased by $17.8 billion in March, following foreign investments and UAE support.
Fitch Ratings believes that efforts to control off-budget spending will help reduce public debt risks.
Egypt, located in North Africa and West Asia, is dealing with an economic crisis caused by foreign currency shortages.
In the last quarter, Egypt's foreign debt increased by $3.5 billion to $168.0 billion.
Moody's changed its outlook on Egypt to "positive" in early March while maintaining its ratings, acknowledging the high government debt ratio and weaker debt affordability compared to other countries.