Egypt’s non-oil business activity in the private sector contracted for a third month in November as the shortage in foreign currency threatens to undermine the nascent recovery of North Africa’s largest economy.
The Emirates NBD Purchasing Managers Index fell to 45, the lowest since September 2013, down from 47.2 in October. Readings above 50 signal expansion, while those below indicate contraction. Saudi Arabia’s PMI rose to 56.3 in November after sliding to a six-year low of 55.7 in October.
“Once again, respondents are citing FX issues as a factor that is resulting in declining output across the private sector," said Jean-Paul Pigat, senior economist at Emirates NBD. Egypt’s economic recovery will partly depend on “authorities easing capital controls and allowing the” pound to weaken in 2016, he said.
November’s drop highlights the challenge facing Egypt’s new central bank governor Tarek Amer as he attempts to ease the dollar shortage amid a decline in tourism revenues and foreign investments. Under his predecessor, the central bank imposed curbs that included limits on dollar deposits. In his two weeks office, Amer cleared the long line of foreign investments trapped in the country, and promised to provide more dollars to the market.