World Bank forecasts Egypt's economic growth at 4.2 percent in FY2025/26 amid inflation relief

The World Bank forecasts that Egypt's gross domestic product (GDP) growth rate will rise to 3.5% in the 2024/2025 fiscal year. This growth is mainly attributed to increased private consumption, easing inflation, strong remittance inflows, and improved market sentiment. It is further projected that Egypt's GDP growth rate will reach 4.2% in the 2025/2026 fiscal year.

In its January "Global Economic Prospects" report, the World Bank stated that the key factors driving GDP growth are "the increase in private consumption amid gradual easing of inflation, stable remittance inflows, and improved market sentiment." However, the report also mentioned that Egypt's interest expenses are expected to remain high in 2025.

In the 2023/2024 fiscal year, Egypt's economic growth slowed to 2.4%. This slowdown was attributed to reduced shipping activity in the Suez Canal and a decline in natural gas production. Additionally, the contraction of the non-oil manufacturing sector, "due to rising input costs, persistent supply chain bottlenecks, and previous foreign exchange shortages," exacerbated the economic downturn.

In March 2024, Egypt implemented a liberalization of its exchange rate, which helped boost investor confidence and stimulated private sector activity in the second half of 2024. Despite this, the International Monetary Fund (IMF) has lowered its real GDP growth forecasts for Egypt by 0.5% and 1% for the 2024/25 and 2025/26 fiscal years, respectively.

A report by Egypt's Information and Decision Support Center (IDSC) in January 2025 indicated that the Egyptian economy is expected to grow by 3.5% to 4.5% in 2025, benefiting from ongoing reforms aimed at promoting investment and curbing inflation. Meanwhile, the IMF's latest report forecasts that the Egyptian economy will grow by 4% in 2025, up from the 2.7% projected for 2024. The IMF also predicts that Egypt's GDP, at constant prices, will increase from EGP 8.4 trillion in 2024 to EGP 8.7 trillion in 2025; at current prices, it may increase from approximately EGP 13.8 trillion in 2024 to EGP 17.5 trillion in 2025.

International institutions, including the IMF, are optimistic about Egypt's economic growth in 2025. The Egyptian government has implemented several reforms to promote investment, private consumption, and remittances. The development of Ras El Hekma and potential geopolitical easing could further support economic recovery. In the medium term, the IMF expects Egypt's economic growth to reach around 5% from 2025 to 2029. The World Bank forecasts growth rates of 3.5% and 4.2% for 2025 and 2026, respectively, noting that increased investment and improved private consumption are major drivers, with private consumption expected to grow by 4.8% in 2025, up from 4.6% in 2024. Recent data from the Egyptian Ministry of Planning shows that Egypt's GDP growth rate was 3.5% in the first quarter of the 2024/25 fiscal year, up from 2.7% in the same period last year.