Egypt’s economy is projected to experience steady growth in the coming years, with a forecasted GDP increase of 4.2% for FY 2025/2026, driven by private consumption, easing inflation, robust remittances, and a positive economic sentiment. The World Bank’s forecast also anticipates a 3.5% GDP growth for FY 2024/2025, reflecting the country’s gradual recovery.

According to the World Bank’s Global Economic Prospects report for January, this growth is primarily attributed to a boost in private consumption, which is supported by gradually easing inflation, alongside a surge in remittances and an overall improvement in investor sentiment. However, the report also cautioned that Egypt’s interest payments are expected to remain elevated in 2025, which could continue to weigh on the state’s budget.

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Economic Slowdown In FY2023/24

Egypt’s economy faced challenges in FY2023/24, with growth slowing to just 2.4%. The decline was largely attributed to a drop in shipping activity through the Suez Canal and a reduction in natural gas production. Additionally, the non-oil manufacturing sector faced a downturn due to rising input costs, supply bottlenecks, and previous foreign exchange shortages.

Signs Of Recovery Following Exchange Rate Liberalization

The liberalization of Egypt’s exchange rate in March 2024 has played a pivotal role in boosting investor confidence and driving private sector activity in the second half of the year. This policy shift has had a positive impact on the economy, though the International Monetary Fund (IMF) has revised its growth forecasts for Egypt downward. The IMF now projects a 0.5% reduction in Egypt’s real GDP growth for FY2024/25 and a 1% downward revision for FY2025/26.

Key Drivers of Egypt’s Economic Recovery

In January 2025, Egypt’s Information and Decision Support Center (IDSC) indicated that the country’s GDP growth could range from 3.5% to 4.5% in 2025, thanks to ongoing reforms aimed at boosting investment and controlling inflation. These efforts are expected to continue driving positive growth, as the country looks to strengthen its economy in the medium term.

The IMF has also revised its forecast, now predicting a 4% growth in Egypt’s economy in 2025, up from an anticipated 2.7% in 2024. The IMF estimates Egypt’s GDP at constant prices will rise to EGP 8.7 trillion in 2025, up from EGP 8.4 trillion in 2024. At current prices, GDP is expected to increase to EGP 17.5 trillion in 2025, a notable rise from EGP 13.8 trillion in the previous year.

Positive Growth Projections From International Institutions

International institutions, including the IMF, remain optimistic about Egypt’s economic outlook in 2025, with projections indicating sustained growth driven by the government’s reforms and improved consumption and remittance flows. The development of key infrastructure projects, such as Ras El-Hikma, combined with potential geopolitical easing, could further enhance Egypt’s recovery.

Looking at the medium term, the IMF projects that Egypt’s growth could reach around 5% between 2025 and 2029. The World Bank also expects positive growth trends, forecasting 3.5% growth for 2025 and 4.2% for 2026, spurred by increased investments and stronger private consumption, which is projected to rise by 4.8% in 2025, up from 4.6% in 2024.

Current Indicators Of Recovery

Recent data from Egypt’s planning ministry shows that the country’s GDP growth reached 3.5% in the first quarter of FY 2024/25, a notable improvement from 2.7% during the same period last year, indicating early signs of recovery following a period of economic slowdown. With sustained reforms and a focus on fostering investment, Egypt’s economy is on a positive trajectory, positioning it for continued growth in the coming years.