The European Bank for Reconstruction and Development (EBRD) has updated its forecast for Egypt’s economic growth, predicting a rise to 4 percent in FY2024/2025 as the country continues its recovery phase. The bank previously estimated that growth for FY2023/2024 reached 2.7 percent.
On a calendar-year basis, Egypt’s economy is expected to grow by 3.2 percent in 2024, with an optimistic outlook of 4.5 percent growth in 2025. Despite ongoing inflation challenges, there are signs of easing; inflation dropped to 25.7 percent in July 2024, down from a peak of 38 percent in September 2023. This improvement is supported by growth in sectors such as retail and wholesale trade, agriculture, communications, and real estate, which have helped offset declines in the gas and non-oil manufacturing industries.
The EBRD also noted that Egypt’s external accounts have strengthened following the devaluation of the Egyptian pound in March 2024, aided by increased financial inflows from international partners and investors. This has led to foreign exchange reserves reaching their highest levels in five years, providing a buffer against potential economic shocks.
However, the EBRD cautioned that ongoing disruptions in the energy and electricity sectors, along with delays in implementing necessary structural reforms under an International Monetary Fund (IMF) program, could pose challenges to sustained growth.
Earlier this month, Fitch Solutions maintained its growth forecast for Egypt at 4.2 percent for FY2024/2025, driven by increased investment and a recovery in the manufacturing sector. Ramona Moubarak, Fitch Solution’s Head of MENA Country Risk, indicated in a September LinkedIn post that the anticipated resolution of the Gaza conflict by late 2024 would further support Egypt’s economic recovery.
Minister of Investment and Foreign Trade Hassan El Khatib also projected a GDP growth rate of 4.2 percent for the current fiscal year during an August cabinet meeting. Following the IMF’s third review of Egypt’s Extended Fund Facility (EFF) in July, the Fund revised its growth forecast to 4 percent for FY2024/2025, with inflation expected to fall below 15 percent.
