A Reuters poll showed that the Egyptian economy likely grew by 4 percent in the fiscal year ending last June. This development represents a slight upward revision from the April forecast of 3.8 percent.
This comes at a time when reforms linked to IMF financing and strong manufacturing activity are supporting a gradual recovery. According to the survey, which was conducted from July 15 to 28, in which 13 economists participated, GDP growth is expected to accelerate to 4.6 percent during the current fiscal year.
Egypt, the most populous Arab country (about 120 million people), faces challenges from the sharp devaluation of its currency, high inflation, and the economic repercussions of the war in Gaza.
Egypt's economic growth slowed to 2.4 percent in 2023-2024, but the government has since accelerated the pace of economic reforms under an USD8 billion programme with the International Monetary Fund (IMF). The government also secured $24 billion in investments from an Emirati sovereign wealth fund, (ADIA) including a large land deal on the Mediterranean coast.
Inflation
Inflation, which peaked at a record 38 percent in September 2023, has begun to decline but remains high. Annual urban consumer price inflation slowed to 14.9 percent in June from 16.8 percent in May.
Economists expect average urban inflation in Egypt to moderate to 12.5 percent in 2025-26, 9.5 percent in 2026-27, and 7.3 percent in 2027-28. However, inflation remains above the Central Bank of Egypt's (CBE) target of five percent to nine percent on average by the fourth quarter of 2026.
Under the IMF-backed reform programme, Egypt has pledged to gradually eliminate energy subsidies, particularly on fuel, although this could keep inflationary pressures high in the near term.
Egyptian pound performance forecast
The Egyptian pound, which was floated in March 2024 after remaining stable at around 30.85 to the dollar for more than a year, is expected to weaken further. The currency is expected to depreciate to 51.1 against the dollar by the end of June 2026 and 52.9 by June 2027. The dollar is currently trading at around 48.6 pounds in interbank transactions.
According to a Reuters poll, interest rates are expected to gradually decline. The CBE is expected to cut its overnight lending rate, currently at 25.0 percent to 17.5 percent by the end of 2025-2026 and to 13 percent the following year.
The CBE cut its benchmark interest rate by a cumulative 325 basis points in April and May, citing slowing inflation and improved foreign exchange liquidity. However, monetary policymakers indicated a more cautious stance in July as volatility in oil prices, driven by supply risks and uncertainty about global demand, led to a "wait and see" approach to monetary easing.
Fastest quarterly growth in three years
Egypt's GDP growth rate during the third quarter of fiscal year 2024-25 rose to 4.77 percent compared to 2.2 percent in the same quarter of the previous year. This is the highest quarterly growth rate in three years.
The Ministry of Planning, Economic Development, and International Cooperation explained that this performance contributed to raising the growth rate during the first nine months of the current fiscal year to approximately 4.2 percent, compared to approximately 2.4 percent during the same period of the previous fiscal year.
This reflects a sustainable recovery and the economy's increasing resilience in the face of global uncertainty. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, confirmed that the Egyptian economy's recovery during the first nine months of the current fiscal year reflects the effectiveness of the government's macro- and structural policy reforms and their role in strengthening the economy's resilience despite global and regional challenges.
Growth rate exceeds 4 percent
Despite continued global uncertainty, preliminary indicators show that the Egyptian economy is on track to achieve a growth rate exceeding the set target of 4 percent during current fiscal year (2024/2025.) This growth forecast is supported by increased private investment and industrial recovery, especially because average growth during the first nine months reached approximately 4.2 percent.