Egypt’s economic recovery picked up pace in the first quarter of FY 24-25
Egypt’s growth forecast for 2025 lowered to 4.2% , EBRD
The European Bank for Reconstruction and Development (EBRD) has lowered Egypt’s growth forecast for 2025 to 4.2%, down 0.3 percentage points from its previous estimates in September, according to its latest Regional Economic Prospects.
The EBRD shared its first forecast for next year, projecting GDP growth to accelerate to 4.7% in 2026 as investor confidence strengthens and reforms gain traction.
According to its preliminary estimates, the multilateral lender expects Egypt’s economy to have grown 2.9% last year, a 0.3 percentage-point downgrade from its September forecast.
Egypt’s economic recovery picked up pace in the first quarter of FY 24-25, following a period of macroeconomic instability and currency volatility, the EBRD said. Growth this fiscal year is expected to be led by “communications, accommodation and food, transportation, and storage (excluding the Suez Canal) and financial services,” alongside the manufacturing sector which is showing signs of recovery after last year’s contraction.
“Prices will likely continue to fall due to base effects and tight monetary policy, despite necessary future adjustments to fuel prices,” the report said, pointing January’s inflation easing to 24%, the country’s lowest inflation reading since December 2022.
Egypt’s external position has strengthened in the wake of the Ras El Hekma agreement, however, “vulnerabilities remain,” the report noted.
The country’s debt-to-GDP ratio is projected to decline to 85% in FY 2024-2025, down from 96% the previous year. However, the burden of debt servicing remains high, according to the lender, with debt payments expected to take up 50-60% of government spending in the current fiscal year.
Economic growth in the SEMED region stalled in 2024, dragged down by war-driven contraction in Lebanon and broader geopolitical instability. A late-year rebound is fueling optimism, with growth expected to pick up in 2025. The region’s growth is forecast to hit 3.7% in 2025 and 4.1% in 2026, though risks — from geopolitical flare-ups to climate shocks — remain high.
