Cairo, Egypt – Egypt’s non-oil private sector activity contracted sharply in March, impacted by the geopolitical fallout from the ongoing conflict in the Middle East. This conflict has created a double burden of declining demand and a sharp rise in production costs.
According to the S&P Global Purchasing Managers’ Index (PMI), the non-oil economy is facing increasing challenges stemming from regional instability.
The index declined and the contraction continued.
Field data showed that the seasonally adjusted headline index fell to 48.0 points in March from 48.9 points in February, marking its lowest level in nearly two years.
This decline indicates a continuation of the contraction for the fourth consecutive month. It was driven by a significant drop in new orders and output. Companies attributed this weakness to customer reluctance due to rising prices and increasing geopolitical uncertainty.
Soaring costs and currency pressures
Conversely, input costs rose sharply, registering their largest increase since the end of 2024. This surge was driven by rising global fuel and commodity prices. Furthermore, the depreciation of the Egyptian pound against the US dollar exacerbated the pressure, as investors sought safe havens.
This was directly reflected in selling prices, which saw their fastest rate of increase since May 2025. The industrial sector was the hardest hit by this jump in input costs.
Expert perspectives and shifting expectations
For his part, David Owen, an economist at S&P Global, noted that the index reading of 48.0 points remains consistent with annual GDP growth of around 4.3%. This reflects underlying momentum despite the contraction. While employment has generally stabilized, future expectations have taken a notable turn. Business confidence regarding activity over the next 12 months has entered negative territory for the first time in the history of the statistical series. This comes amid concerns about continued uncertainty related to the war, which is also impacting supply chains and inflation rates.
