Egypt’s non-oil private sector contracted for the sixth straight month in August 2025, with the S&P Global Purchasing Managers’ Index (PMI) slipping to 49.2 from 49.5 in July, staying below the 50 mark that separates growth from contraction. Business activity and new orders declined across all monitored sectors as weak demand and lingering inflation continued to weigh on firms.
Despite the downturn, companies expanded employment for a second consecutive month, ending nine months of stagnation, as they sought to address backlogs and improve capacity. Staffing increases were modest but signaled cautious optimism. Input cost inflation also fell to its lowest level since March, a near 4½-year low, helping firms reduce the gap between input and output price inflation. Analysts suggest this easing of cost pressures could encourage businesses to pass savings on to customers, potentially stimulating demand.
Purchasing volumes and inventory holdings, however, continued to decline, reflecting firms’ strategic caution amid fragile demand. Business confidence remained weak, unchanged from July and only slightly above June’s record low, underscoring persistent economic uncertainty.
The broader economy shows more resilience. Egypt recorded 4.77% GDP growth in Q3 FY2024/25, the highest in three years, supported by tourism, telecoms, and non-oil manufacturing. Private investment surged 24.2%, and foreign direct investment inflows reached $46.1 billion since March 2024, helping stabilize the pound after its floatation. Inflation also eased sharply, dropping from 23% in January to 12.5% in February 2025.
International partners remain engaged: the IMF released $2 billion in March under its $8 billion support program, alongside an additional $1.3 billion under the Resilience and Sustainability Facility, while the EU approved a €5 billion macro-financial package. These interventions underscore global confidence in Egypt’s reform agenda, even as private sector fragility highlights the challenges ahead.
