Business activity in Egypt shrank for the 12th consecutive month in September, with output declining the most in five months and a weakening currency pushing up prices, a survey on Wednesday found. The Emirates NBD Egypt Purchasing Managers' Index (PMI) for the non-oil private sector stood at 46.3 points, down from August's 47.0 points and well below the 50 point mark that separates growth from contraction. "As well as marking a one-year downturn, the latest reading pointed to an accelerated contraction for the second straight month," said Markit, which compiled the data. Egypt's economy has been struggling since 2011 due to a sharp drop in tourism and foreign investments, two main sources of hard currency for the import-dependent country. The country reached a preliminary agreement with the International Monetary Fund in August for a three-year $12 billion loan programme aimed at plugging its financing gap and stabilising its currency market. Jean-Paul Pigat, senior economist at Emirates NBD said the weakening currency and a value-added tax adopted recently as part of economic reforms had combined to push up prices and weigh on growth. "While many of the economic reforms expected in Q4 will ultimately prove beneficial for long-term stability, in the near term they could result in a further deterioration in business conditions for the private sector," he added. Egypt's annual headline inflation jumped to 16.4 percent in August 2016 to its highest in at least seven years, according to state statistics body CAPMAS. Egypt has been expected to soon devalue its currency, which officially trades at 8.78 pounds to the dollar, to bring it into line with a black market rate that has hovered at around 14 pounds in recent days. In March, Egypt, which relies heavily on imports of wheat and other staples to feed its population of 90 million, weakened the Egyptian pound by 14 percent of its value against the dollar in an attempt to eliminate the black market. Other expected reforms include cuts to the bloated civil service and further slashes to subsidies in petroleum and electricity. Weaker output and declines in new business continued to weigh on employment, which dropped for a 16th consecutive month in September, Markit said, adding: "The rate of job shedding was only marginally slower than August's survey-record." Egypt's official unemployment rate registered 12.5 percent in the second quarter of 2016. This story has been edited by Ahram Online
