Egypt’s economic growth is projected to hit 4% in the current fiscal year (FY) 2024/2025, marking a modest rebound from the 3% growth recorded in FY2023/2024, according to a recent research note by Al Ahly Pharos.
This recovery is driven by improved import processes for production inputs and materials, though it is tempered by restrictive monetary policies and a sharp decline in Suez Canal revenues.
Key contributors to growth include resilient sectors such as agriculture, internal trade, electricity, government services, and construction, with the Ras El-Hekma project expected to significantly boost activity in 2025.
In contrast, weaker performance is anticipated in the manufacturing and extraction sectors, as well as from the Suez Canal, which remains impacted by regional geopolitical instability.
Looking ahead to FY2025/2026, GDP growth is expected to climb to 5.6%, propelled by expanded construction activities and potential geopolitical stabilization that could improve Suez Canal revenues.
Egypt’s monetary outlook for 2025 hinges heavily on ongoing negotiations with the International Monetary Fund (IMF).
Potential scenarios for the economy include a stable outlook, where the pound hovers around EGP 50 per USD with limited inflationary pressures; a stricter reform path that could see the pound reach EGP 55 per USD with higher inflation; or a moderate approach, balancing fiscal consolidation with slower reform implementation.
Inflation under these scenarios is expected to range between 14.6% and 24% in 2025, depending on the course of action taken.
Egypt faces external debt obligations amounting to approximately $33.2 billion in 2025 and $55 billion in 2026, requiring a focus on attracting foreign investment and asset sales. While there are signs of improvement in economic indicators compared to the previous year, challenges persist.
Al Ahly Pharos emphasized the importance of structural reforms to address the budget and current account deficits, establish consistent tax policies, revise energy pricing for industrial exporters, and improve governance and policy predictability.
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