Restrictions on foreign exchange and the impact of terrorism in the Sinai have slowed economic activity in Egypt to its lowest point since before the removal of Mohammed Morsi, according to new economic data.
The purchasing managers’ index recorded a score of 45.0 in November, its lowest level since 2013 and below 47.2 in October. Any score under 50 indicates that the economy is contracting.
A crackdown on black market trading in US dollars has hit private sector activity in the country.
Observers hoped for a depreciation of the Egyptian pound but this has not happened so far.
“The central bank really needs to get a grip now,” said Jason Tuvey, an emerging markets economist at Capital Economics.
“Restrictions have meant firms have been unable to purchase goods, leading them to shut down. “On top of that you have the knock-on effects from the Russian plane crash,” he said.
A suspected terrorist attack on a plane flying from Sharm El Sheikh in October, in which 224 tourists and crew were killed , led to Britain and Russia, Egypt’s largest source markets for tourists, suspending flights to the country.
Tourism brings in some US$7 billion in vital foreign currency.
abouyamourn@thenational.ae
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