Egypt’s private sector has solidified its lead as the main engine of capital formation in the economy, according to new data from the Ministry of Planning, Economic Development, and International Cooperation. For the third consecutive quarter, private investments outpaced public investment, accounting for 62.8% of total implemented investments (excluding inventory) in Q3 of fiscal year 2024/2025.
At constant prices, private sector investment surged 24.2% year-on-year, reaching EGP 142.8 billion, while public investment sharply declined to EGP 84.5 billion, a drop of 45.6% compared to the same quarter last year. This marks a significant turning point in Egypt’s investment structure and underscores a deliberate policy shift: restructuring public expenditure, curbing state-led capital outlays, and expanding private sector participation.
A Deliberate Policy Pivot Toward Private-Led Growth
The ministry’s statement attributed this shift to governance measures on public investment and a broader state-driven strategy to streamline public spending. While private capital is rising, the decline in public investment has had a notable macroeconomic impact. The net contribution of investment to GDP growth turned negative—subtracting 2.44 percentage points—highlighting the magnitude of the public investment contraction.
Nonetheless, the structural trend signals increased economic reliance on the private sector and potentially more sustainable, market-driven capital formation over the medium term.
Credit Growth and Monetary Easing Fuel Private Sector Optimism
Supporting this trend, real private sector credit growth averaged 11.7% during the third quarter, before moderating to 8% year-on-year by the end of April 2025. Notably, the industrial sector claimed the largest share of this credit—43%—reflecting a reallocation of resources toward productive investments.
The ministry projects further acceleration in private sector credit in the months ahead, as Egypt’s Central Bank begins a monetary easing cycle, aimed at reducing borrowing costs and supporting business expansion.
Private Sector Activity Rebounds: PMI Signals Stability
Indicators of real-sector activity also suggest gradual improvement in private enterprise performance. Egypt’s Purchasing Managers’ Index (PMI) climbed to 50.7 in January 2025—its highest reading in 50 months—and remained in expansion territory at 50.1 in February, before a slight dip to 49.2 in March. Despite fluctuations, the index remains close to the neutral 50-point mark, suggesting ongoing stabilization in non-oil private sector activity.
Legislative Support for Economic Recovery and Human Development
To build on this momentum, Egypt’s House of Representatives approved the national economic and social development plan for FY 2025/2026 in June 2025. The plan targets 4.5% GDP growth and caps public investment at EGP 1.154 trillion, consistent with the government’s ongoing commitment to fiscal discipline and macroeconomic stability.
Notably, 47% of treasury-funded public investment under the new plan will go toward human development sectors—healthcare, education, and social services—affirming the state’s long-term vision that human capital is the cornerstone of sustainable development.
Egypt’s Growth Outlook: Strongest in Three Years
The ministry also reported that GDP growth during Q3 FY 2024/2025 reached 4.77%, marking the highest quarterly growth rate in three years, and nearly doubling the growth recorded in the same period last year (2.2%). This reflects a broader economic recovery, despite the dampening effect of public investment cuts.
