In a previous survey conducted in January, before the conflict began, economists had projected growth of 4.9%, noting at the time that reforms implemented under the International Monetary Fund (IMF) program two years earlier were delivering results faster than anticipated.
Analysts have lowered their economic growth forecasts for Egypt for both this year and next in a Reuters survey, after the war involving Iran pushed energy prices higher and added pressure on inflation.
The median estimates of 12 economists, surveyed between April 8 and April 23, indicated that Egypt’s GDP growth is expected to reach 4.6% in the fiscal year ending in June, remain at 4.6% in the following year, and accelerate to 5.5% in FY2027/2028.
In a previous survey conducted in January, before the conflict began, economists had projected growth of 4.9%, noting at the time that reforms implemented under the International Monetary Fund (IMF) program two years earlier were delivering results faster than anticipated.
Pascal Devaux, an economist at BNP Paribas, said that the energy prices are expected to remain elevated in the coming quarters, even after oil flows through the Strait of Hormuz return to normal. This will increase inflationary pressures in Egypt.
He added that economic activity in Egypt is likely to slow, but not experience a sharp decline.
Economic growth had fallen to 2.4% in FY2023/2024, but rebounded after March 2024, when Egypt sharply devalued its currency and raised interest rates as part of an $8 billion IMF financial support package.
The survey projected that inflation will average 13.5% in FY2025/2026, decline to 12% in 2026/2027, and further ease to 9% in 2027/2028. These figures are higher than previous forecasts of 11.6%, 9.1%, and 8.2%, respectively.
Harry Chambers, an economist at Capital Economics, said that Inflation is already high, and if the conflict in the Middle East continues and oil prices remain elevated, upward pressure on inflation will persist.
Earlier this month, the Central Bank of Egypt (CBE) revised down its annual GDP growth forecast for the FY2025/2026 fiscal year to 4.9%, from 5.1% projected in February, citing the impact of the Iran conflict.
Similarly, the International Monetary Fund reduced its growth forecast to 4.2% for 2026, down from a previous estimate of 4.7%.
Beyond rising energy prices, the conflict could also affect Egypt’s economy by hurting tourism, slowing remittance inflows from Egyptians working in Gulf countries, and reducing revenues from ships transiting the Suez Canal.
Data from Egypt’s Central Agency for Public Mobilization and Statistics (CAPMAS) showed that annual urban inflation rose faster than expected to 15.2% in March, up from 13.4% in February.
The war is also expected to prompt the Central Bank to slow the pace of monetary easing that began about a year ago.
Analysts now expect the lending rate to remain at 20% by the end of June, before declining to 17% by the end of June next year, and further to 13.25% by the end of June 2028.
The Central Bank cut its key interest rate five times in 2025, followed by another reduction in February, bringing the cumulative cuts to 825 basis points.
Meanwhile, analysts forecast a slight depreciation of the Egyptian pound to 51.58 per dollar by the end of June 2026, compared with its current level of 51.06 pounds. The currency is expected to reach 51.50 per dollar by the end of June 2027, and 51.85 per dollar by the end of June 2028.
