The EBRD now expects Egypt’s real GDP to grow by 3.8% in FY2024/2025, up from 2.4% in the previous fiscal year, and to reach 4.4% in FY2025/2026.
Egypt’s economy is projected to rebound modestly over the next two fiscal years, though growth forecasts have been revised slightly downward due to the impact of ongoing geopolitical tensions and global economic uncertainty, according to the European Bank for Reconstruction and Development (EBRD)’s Regional Economic Prospects report released Tuesday.
The EBRD now expects Egypt’s real GDP to grow by 3.8% in FY2024/2025, up from 2.4% in the previous fiscal year, and to reach 4.4% in FY2025/2026. These projections reflect slight downward revisions—by 0.2 percentage points each—compared to the Bank’s previous outlook published in February.
The updated forecasts come amid continued fallout from global conflicts and economic headwinds. “The growth outlook depends on the implementation of structural reforms, particularly related to the state’s presence in the economy, and the continued reduction of debt levels and associated service costs,” the report noted, while warning of persistent risks tied to trade policy uncertainty and Egypt’s reliance on foreign portfolio inflows.
The report highlighted an uptick in Egypt’s economic performance in the first half of the current fiscal year (July–December 2024), where growth rose to 3.9% year-on-year, compared to 2.4% in the same period the year before. This was largely driven by recoveries in manufacturing, transportation, and retail and wholesale trade.
Manufacturing, in particular, showed signs of recovery after experiencing notable contraction during Egypt’s prolonged foreign exchange (FX) crunch—an issue that had weighed on production capacity and business confidence since the fallout from the Russia-Ukraine conflict began in 2022.
Despite improvements in non-oil sectors, the report noted ongoing weakness in Egypt’s oil and gas industry, which continues to contract. The EBRD identified this as a pressing policy challenge, emphasizing the need for the Egyptian government to address arrears owed to international energy firms to stabilize the sector and support medium-term growth.
Inflation and Monetary Policy
Egypt’s inflation rate has been on a downward trajectory, dropping to 12.8% in February 2025, its lowest level since March 2022. The EBRD attributed this decline to the Central Bank of Egypt’s tight monetary policy, which has been in place since March 2022 as part of efforts to control inflation and stabilize the currency.
However, inflationary pressures could re-emerge in the short term due to rising energy prices. “Rising fuel prices, as part of the government’s commitment to reach cost recovery by the end of the year under the International Monetary Fund (IMF)-supported programme, may put upwards pressure on consumer prices,” the report cautioned.
Egypt’s net international reserves (NIR) reached a 20-year high of $47.4 billion in February, with a further increase to $48.1 billion in April, according to Central Bank data. The EBRD expects reserves to remain stable in the near term.
Meanwhile, an IMF mission is currently in Egypt for the fifth review of the country’s Extended Fund Facility (EFF) programme. The review is expected to conclude before the end of June, potentially unlocking further financial support and bolstering investor confidence.
The EBRD also trimmed its 2025 growth forecast for its broader regions—from 3.2% in February to 3.0%, citing factors such as new U.S. tariffs, trade disruptions, and economic sluggishness in Germany and China. Growth across the EBRD’s countries of operation slowed from 3.4% in 2022 to 2.8% in both 2023 and 2024, with recovery to 3.4% projected for 2026.
Geopolitical uncertainty, including the war in Ukraine, instability in Gaza, and broader Middle East tensions, remains a key downside risk across the region.
