Egypt’s manufacturing outlook has improved significantly amid inflation and currency devaluation. Manufacturers are increasingly considering Egypt as an alternative sourcing destination due to its Free Trade Agreement with the U.S. and strong economic forecasts. Despite challenges, growth in capacity and investment from foreign companies signal a bright future for the sector.

The outlook for Egypt’s manufacturing sector has undergone significant improvement, despite persistent inflation, currency devaluation, and rising raw material costs. Manufacturers have reported a newfound optimism, sparked by changing geopolitical factors that have led companies, particularly from China, to explore Egypt as an alternative sourcing destination. The country’s free trade agreement with the United States and promising economic forecasts for 2025 contribute to this appeal.

Rajat Gupta, Chief Marketing Officer at Winway Global Apparel, noted that the political and economic challenges Egypt faced in the past have begun to diminish. With plans for expansion at their new facility in the Islamia Public Free Zone, Gupta emphasized the advantages of raw material availability, workforce accessibility, and competitive wages as attractive factors for investment.

Gupta outlined the operational growth of their factory, projecting an increase from the current 10 production lines to 56 by 2026. He affirmed that despite criticisms regarding efficiency and absenteeism in Egypt, the implementation of a standardized system could mitigate these issues. Collaboration with large manufacturers is expected to further enhance workforce management protocols.

Siddharth Sinha, founder of Velocity Egypt, echoed Gupta’s sentiments, highlighting the significant transformations Egypt is undergoing. He pointed out the difficulties facing traditional manufacturing hubs such as China, Turkey, Vietnam, and Bangladesh, suggesting that Egypt’s robust infrastructure and stable operating conditions make it an appealing choice for manufacturers.

Sinha identified the need for increased foreign investment to bolster local mills, suggesting that the lack of international exposure hinders efficiency. He acknowledged that efficiencies are improving with the influx of global companies, which is shifting the working culture within Egyptian factories.

Amidst these developments, Egypt’s economic landscape has faced considerable challenges, including high inflation rates and currency depreciation. The pound has lost substantial value against the dollar, and minimum wage rates have doubled in two years in an effort to safeguard worker interests amidst economic reforms driven by the International Monetary Fund (IMF).

The apparel sector has shown resilience, with exports rising by 17 percent in 2024, reaching $2.27 billion. The growth is primarily attributed to ongoing foreign investment, especially from China, Vietnam, Turkey, and India, as well as significant local expansions.

Ravi Hurpaul, Managing Director of Regal House Consulting, noted the strong presence of international sports brands in Egypt. He emphasized the importance of volume and Free Trade Agreement benefits for these companies, while also acknowledging the need for Egypt to evolve in order to remain competitive in the global apparel market.

Hurpaul indicated that for Egypt to solidify its position, it must welcome entrepreneurs and expertise while enhancing its labor force skill set. The opportunity for growth exists now, as rediscovery of Egypt’s potential in fabric and garment production unfolds.

This article originates from SJ’s Sourcing Report 2025, which provides a comprehensive analysis of the shifting dynamics within Egypt’s manufacturing sector.

In summary, Egypt is witnessing a dramatic shift in its manufacturing landscape, driven by foreign investment and evolving geopolitical considerations. Manufacturers are increasingly viewing Egypt as a viable sourcing destination amid challenges faced by other countries. As the industry adapts to economic changes and the demand for skilled labor persists, the potential for growth in Egypt’s apparel sector remains promising. The support from international brands and investments will be crucial in positioning Egypt as a competitive player in the global market.

Original Source: sourcingjournal.com

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