On Tuesday, according to the results of a survey, business activity in Egypt’s non-oil private sector collapsed in April, following the total shutdown of the tourism industry, weakening demand as well as the imposition of lockdowns in its cities as the government battled the coronavirus which emerged from China.
IHS Markit’s Purchasing Managers’ Index (PMI) for the non-oil private sector came in at 29.7 last month, down from 44.2 in March 2020 and far below the 50.0 threshold that separates growth from contraction.
It marked the lowest reading since the survey began nine years ago.
“The reading signaled a severe decline in business conditions,” said IHS Markit.
The coronavirus pandemic caused Egyptian companies to put in place large cost saving measures which including labor reductions, and caused many firms to close down altogether, said IHS Markit.
Following the virtual shut down of Egypt’s tourist market, the country’s International Cooperation Minister Rania al-Mashat said last week, because of the the coronavirus, 5% of Egypt’s gross domestic product has been affected.
The last scheduled airline flights to Egypt ended on March 19, 2020.
Coffee shops, restaurants, and hotels have also been shut down, and a curfew is in place from 9:00 pm to 6:00 am.
“Businesses lucky enough to remain open scaled back activity on a massive scale, as many highlighted sharp falls in domestic sales and foreign demand,” said IHS Markit economist David Owen.
“Business expectations remain strong though, in fact improving since March, which may suggest firms will look to retain workforces for when the economy reopens,” said Owen.