The headline PMI fell to 48 in March from 48.9 in February, marking a fourth consecutive month below the 50 threshold that separates growth from contraction.
March’s PMI figures “relates to annual GDP growth of around 4.3%. Combined with stronger PMI readings earlier in the first quarter, recent data suggests the domestic non-oil sector is on a solid underlying growth path,” said S&P Global Senior Economist David Owen.
The survey pointed to weakening demand and rising prices, linked to the economic fallout from the US-Israeli war on Iran and wider regional tensions.
Output and new orders fell to their lowest levels since April 2024, signalling a continued contraction in operating conditions, broadly in line with the long-run average of 48.2.
Input costs rose sharply during the month, recording the steepest increase since the end of 2024, driven by higher fuel and commodity prices and the weaker Egyptian pound.
Companies also raised selling prices at the fastest pace in ten months, passing on part of the cost increases to customers, citing both fuel and other commodity price increases.
“As the US dollar strengthens amid a flight to safety, and energy prices remain elevated, Egyptian companies are clearly feeling the impact on their balance sheets,” Owen said.
The pound remained under pressure, trading near EGP 54.4 to the dollar by the end of last week, reflecting continued capital outflows and external pressures.
Average purchase prices paid by businesses rose quickly alongside the fastest rate of inflation in 18 months, with manufacturing recording the sharpest increase among non-oil sectors.
Higher prices contributed to weaker demand, with new sales declining at a faster pace than in February.
Despite softer demand, purchasing activity increased slightly after two months of decline, while employment levels were broadly stable following job cuts late in 2025.
Business sentiment weakened, with some non-oil firms expecting output to fall over the coming year amid uncertainty linked to geopolitical developments.
Egypt’s economic outlook includes warnings that domestic risks could hinder Egypt's economic recovery, despite promises of growth, according to the International Monetary Fund’s (IMF) latest report on the fifth and sixth reviews under the country's Extended Fund Facility (EFF) loan programme.
The IMF warned that failure to implement critical policies could affect its ability to stabilize inflation and address fiscal vulnerabilities.
The IMF recently approved about $2.3 billion in financing for Egypt under its EFF programme and expects growth to reach 4.7 percent in the 2025/2026 fiscal year, rising to 5.7 percent over the medium term as reforms take hold.
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