Egypt's private sector activity hits 8-month high in July

Egypt’s non-oil private-sector activity gained pace in July, supported by an increase in new orders from domestic and foreign markets, Emirates NBD said in a report.

The Emirates NBD Egypt Purchasing Manager’s Index (PMI) for the private sector rose to 50.3 from 49.4 in June - hitting an eight-month high.

A level above 50 means business is expanding and below 50, contracting.

“Though indicating only a marginal strengthening in business conditions, the headline figure hit an eight-month high as new orders entered expansion territory,” the bank said.

Daniel Richards, MENA economist, Emirates NBD, added that the positive PMI reading “supports the view that real GDP growth will strengthen in 2018-2019."

“There is a greater recovery in the private sector, support by gradual monetary policy normalization, improved political stability and a rebound in the tourism sector."

Egypt's fiscal year runs from July to June.

Meanwhile, the Central Bank of Egypt said last week annual core inflation rate declined from 10.9 percent in June to 8.45 percent in July.

"As a result of the modest depreciation in Egyptian pound, inflation is likely to resume its downward trend later this year, providing scope for the central bank to resume its easing cycle," Capital Economics said in a recent report.

The London-based consultancy expects the Egyptian Pound to fall from 17.9 a US dollar to 19 per US Dollar by the end of 2018 and to 20 per US Dollar by end-2019.  

Separately, International Monetary Fund's (IMF) said in its latest review that the economic situation in Egypt is expected to improve after three years, as economic reforms are steadily moving forward.

In an attempt to revive its faltering economy since 2011, Egypt obtained a $12 billion IMF loan in 2016 in exchange for implementing a rigorous reform program.

These reforms included a raft of measures such as devaluing the pound, loosening capital controls, ending energy subsidies, reforming public enterprises and overhauling monetary policy.

In November 2016, Egypt began with floating the pound. In 2017, it slashed parts of its energy subsidies, resulting in a 60 percent surge in fuel prices.