Egypt’s Minister of Finance Mohamed Maait has confirmed that the country’s economy is continuing to recover and production is being restored, as evidenced by the non-oil private sector.
This proves that the country’s economic situation is overcoming the negative effects of the novel coronavirus (COVID-19) pandemic.
The Purchasing Managers’ Index (PMI) for November, which measures the performance of the 400 largest private sector companies, showed an improvement in the private sector’s confidence in Egypt’s economic performance.
The PMI scored 50.9 points, to remain above the neutral level of 50 points which marks the boundary between growth and contraction in this index. The figures illustrate that Egypt has remained above neutral for the third consecutive month, indicating a recovery in the private sector’s economic performance.
In a statement on Tuesday, Maait said that commercial activity has continued to recover, with new export volumes increasing for the fifth month in a row.
This comes as Egyptian companies reported an additional improvement in foreign demand, after the slowdown caused by the coronavirus. The seasonally adjusted production index has also remained much higher than the average.
Maait added that this improvement in company performances reflects the Egyptian economy’s resilience and the ability of companies operating in the local market to deal with the repercussions of the ongoing crisis.
The minister also said that there remains a gap compared to the pre-pandemic economic performance, but it can be overcome if the economic improvement continues. This will also take into account the flexibility of measures to combat this global pandemic, and the continuation of the stimulation policies of economy and finance.
He added that the PMI for the non-oil private sector during November showed a remarkable increase in activity. This was driven by the increased volume of customer demand for the 400 largest companies operating in the manufacturing, wholesale and retail trade, services, and construction sectors.
Maait said that the production rates of these companies continued to increase thanks to the flexibility of the restrictions Egypt applied to combat the coronavirus. This was also driven by the positive effects of the financial and economic incentive policies implemented by the Egyptian government during the last period.
For his part, Deputy Minister for Financial Policies and Institutional Development Ahmed Kuchouk said basic index and sub-indicator results for private sector procurement managers in November included positive aspects in the private sector’s performance.
“We aim to continue to improve during the coming months by adopting stimulating financial policies and support for economic activity, especially the industry and export sectors, such as cash payment programmes for exporters’ dues with the Export Development Fund (EDF),” Maait said, “The Ministry of Finance bears the burden of reducing the cost of electricity for the industrial sector by about 9% starting from April 2020, as well as the burdens of reducing the price of natural gas for industrial facilities to reach $4.5 per thermal unit, starting from April 2020, against $5.5 per unit.”
He pointed out that it is important for close monitoring of the situation to continue. This is particularly relevant in light of the PMI results relating to the private sector’s fears of a second wave of the coronavirus that has hit several countries around the world, which may impede the global and local economic recoveries.
Maait said that Egypt’s fiscal policy will take into account these concerns, as well as some aspects revealed by the report. These include the decline in private sector employment rates, as workers who have recently retired from companies or who have left their jobs have not been replaced.
This is despite the fact that this decline is the slowest in the chain, in addition to the increase in the local production input prices and some raw materials. There has also been a rise in shipping costs, and the strong salary increase for November 2020.