Egypt’s economy is expected to see a positive rebound in the upcoming fiscal years, with the World Bank forecasting a GDP growth rate of 3.5% for FY2024/25, improving to 4.2% in FY2025/26. This optimism stems from an anticipated recovery in private consumption, driven by a gradual reduction in inflation, sustained remittance inflows, and a more positive economic sentiment.
The growth forecast is also supported by improving investor confidence and the country’s efforts to stabilize its financial and economic situation. After a challenging period, the liberalization of the Egyptian pound in March 2024 helped restore investor confidence, contributing to a more robust private sector activity by mid-2024.
Despite some fiscal pressures, including elevated interest payments, the World Bank remains optimistic about Egypt’s economic trajectory, highlighting the resilience of the economy amid external challenges. These projections align with Egypt’s growing positive momentum, as reflected in the country’s 3.5% GDP growth reported in the first quarter of FY2024/25, an improvement from the 2.7% growth seen during the same period last year.
IMF Adjusts Downward, But Long-Term Recovery Outlook Remains Strong
In contrast, the International Monetary Fund (IMF) has downgraded its GDP growth projections for Egypt, reducing the forecast for FY2024/25 by 0.5% and for FY2025/26 by 1%. The IMF now expects Egypt’s economy to grow by 3.6% in FY2024/25 and 4.1% in FY2025/26, down from its earlier projections of 4.1% and 5.1%, respectively.
This adjustment is mainly attributed to the ongoing challenges in the foreign exchange market, which have impacted economic performance. However, the IMF remains cautiously optimistic, noting that as the foreign exchange conditions improve and investor sentiment strengthens, sectors such as mining and manufacturing will be key drivers of economic recovery.
Positive Signs for Egypt’s Economic Growth
Despite the IMF’s more conservative outlook, the Ministry of Planning and Economic Development reported a positive 3.5% GDP growth for Egypt during the first quarter of FY2024/25, showing signs of recovery from the previous year’s slower growth. Furthermore, the Egyptian economy is benefitting from key developments like the Suez Canal expansion, improving global trade, and growing foreign direct investments (FDI) that continue to provide support to the economy.
Egypt’s fiscal and economic reforms, combined with continued support from remittances and efforts to enhance private sector activity, contribute to a more optimistic economic outlook over the next two years. These factors have led to an overall improvement in Egypt’s economic sentiment and set the stage for stronger growth in the years ahead.
In summary, while the IMF has adjusted its growth projections downward, the World Bank remains more optimistic about Egypt’s economic recovery. With anticipated growth of 3.5% for FY2024/25 and 4.2% in FY2025/26, the outlook for Egypt’s economy is positive, driven by improving consumption, investment, and sentiment.
