August is 10th month in a row of decline in economic activity

The Egyptian economy continues to travel its bumpy path due to ongoing political instability. A first measure of the impact of the recent events on the economy has been released today by HSBC bank. Its monthly Purchasing Managers Index is derived from a survey on the evolution of the non-oil private business activity of 350 Egyptian private companies.

The month of July witnessed a record decline in economic activity, while the August index shows the economy was contracting still further.

The index reached 41.7 and 42.2 points in July and August, far below the 50 point mark indicating a stagnation in the level of activity.

The survey shows output, orders and business activity all declined in the month of August.

The survey makes clear that this recession did not begin with recent events. August was the 10th consecutive month in which the index has been below the 50 point landmark.

The economic growth for the fiscal year 2012/13 was evaluated at 2 percent, barely keeping up with population growth of 1.7 percent.

Unemployment is soaring, reaching a record high of 13.3 percent in the second quarter of 2013.

Thanks to massive aid from Gulf countries, the government has recently unveiled a stimulus plan of US$ 22.3 billion. Infrastructure, housing, water and electricity are the main sectors that stand to benefit from the plan.

Minister of Finance Ahmed Galal announced that it is expected that the plan will boost economic growth to 3.5 percent in 2013/14, while reducing the budget deficit from 14 to 9 percent.