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Egypt’s non-oil activity shrinks for 28th straight month as inflation shoots

Published

1 year ago

April 4, 2023

A recent survey by S&P Global on Egypt’s economy has revealed the country’s non-oil private sector activity shrank for the 28th straight month in March.

The survey shows that currency restrictions and rising inflation also affected businesses.

In January, the non-oil economy suffered a sharp contraction in operating conditions, as a depreciation of the pound drove a rapid acceleration in price pressures.

The S&P Global Egypt Purchasing Managers’ Index (PMI) edged down to 46.7 in March from 46.9 in February, well below the 50.0 threshold that marks growth in activity.

According to S&P Global economist David Owen, “at 46.7, the headline PMI signaled a further solid deterioration in the performance of non-oil companies, driven by steep falls in activity and new business volumes”.

“Steep inflationary pressures and a drop in client demand continued to negatively impact non-oil businesses, chiefly through a sharp reduction in new orders.

“Output levels fell at a marked rate across the non-oil private sector during March, in part due to ongoing difficulties with accessing key inputs due to import controls and currency restrictions.

“Despite picking up to a three-month high, the year-ahead outlook for activity was still among the weakest recorded since the series began in early-2012,” S&P wrote.

Despite the Egyptian pound depreciating by half since March 2022 and a $3 billion IMF assistance package signed in December, Egypt remains short of foreign currency.

According to the state statistics organization, headline inflation soared to 31.9% in February from 25.8% in January, while core inflation went up to 40.26%.

Egyptian economist, Sherif Kamel had predicted that Egypt’s economy in 2023 would be challenging, given the expected repercussions of the global recession, rising inflation, and currency uncertainty.

Related Topics:Egypt Egypt's non-oil Featured

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Nigerian govt denies reports it plans to borrow pension fund for infrastructure

Published

3 mins ago

May 17, 2024

Ifeoluwa Dada

The Nigerian government has denied reports that it plans to borrow the N20tn pension fund to finance infrastructural projects.

In a statement made in Abuja, Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, stated that the government would abide by the laws and guidelines in place pertaining to the pension fund.

Following a two-day Federal Executive Council meeting at the Presidential Villa on Tuesday, the minister reportedly informed reporters that the government would present a plan to use local funds, including the fund, to finance infrastructure development.

Edunstated that the government does not intend to exceed these legal boundaries, emphasising that the government was committed to protecting workers’ pensions.

“It has come to my notice that stories are making the round that the Federal Government plans to illegally access the hard-earned savings and pension contributions of workers. Nothing could be farther from the truth.

“The pension industry, like most the financial industries, is highly regulated. There are rules. There are limitations about what pension money can be invested in and what it cannot be invested in.

“The Federal Government has no intention whatsoever to go beyond those limitations and go outside those bounds which are there to safeguard the pensions of workers.

“What was announced to the Federal Executive Council was that there was an ongoing initiative drawing in all the major stakeholders in the long-term saving industry, those that handle funds that are available over a long period to see how, within the regulations and the laws; these funds could be used maximally to drive investment in key growth areas,” Edun clarified.

The plan to spend the pension fund was reported and was widely criticised. The Trade Union Congress of Nigeria and the Nigeria Labour Congress had earlier on Thursday urged the government to abstain from making any changes to the pension fund.

They stated, “Nigerian workers have entrusted their hard-earned savings for retirement security, not as a means for government projects. It is imperative to halt any further plans to tap into these funds, especially given the lack of transparency and accountability in past government borrowing practices.”

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Nigeria’s inflation hits 28-year high of 33.69% in April

Published

1 day ago

May 16, 2024

Ifeoluwa Dada

Nigeria’s consumer inflation reached a 28-year high of 33.69% in April, up from 33.20% in March, according to statistics agency figures released on Wednesday.

President Bola Tinubu’s administration has slashed petrol and energy subsidies and devalued the local naira currency twice.

To manage pricing pressures, the central bank has hiked interest rates twice this year, including the highest hike in almost 17 years. The central bank governor has stated that rates will remain high for as long as necessary to reduce inflation. The bank will host another rate-setting meeting next week.

When compared to the previous year, the inflation rate in April 2024 was 11.47 percentage points more than in April 2023, when it stood at 22.22 percent. This implies that the headline inflation rate has increased dramatically during the last year.

According to the National Bureau of Statistics, food and nonalcoholic beverages remained the largest contributor to inflation in April. Food inflation, which accounts for most of the inflation basket, rose to 40.53% yearly from 40.01% in March.

Price pressures have left millions of Nigerians facing the biggest cost-of-living crisis in decades, as they fight to satisfy their most basic necessities.

Tinubu has offered a 35% salary increase for state personnel to alleviate pressure on government workers. To assist disadvantaged households, his government has resumed a direct cash transfer program and provided at least 42,000 tons of grains such as corn and millet.