Egypt’s economic growth is projected to rise to 4.0% by the end of June 2025, as austerity measures from an International Monetary Fund program take effect, according to a Reuters poll released on Thursday.
The median forecast from a Reuters poll of 13 economists conducted between October 9 and 23 anticipates GDP growth will accelerate to 4.7% in 2025/26 and reach 5.3% by 2026/27.
For 2023/24, GDP growth is expected to decline to 2.4%, down from 3.8% the previous year, as reported by central bank figures. This slowdown is attributed to a currency crisis and the conflict in nearby Gaza, which has impacted Suez Canal revenues and tourism.
In February, Egypt transferred the rights to develop real estate along its Mediterranean coast to the UAE sovereign fund ADQ for $24 billion, setting the stage for an $8 billion financial reform agreement with the IMF the following month.
“While Egypt’s economic outlook is improving, it remains gradual,” noted James Swanston from Capital Economics, emphasizing that fiscal policy will remain stringent to reduce the budget deficit and lower the debt-to-GDP ratio.
“The effects of a weaker pound are beginning to emerge, but although inflation is easing, interest rates are unlikely to be cut until Q1 2025, which would benefit households and businesses,” Swanston added.
The poll projects annual headline inflation rates of 20.4% for 2024/25 and 11.4% for 2025/26. Inflation saw a slight increase over the last two months, reaching 26.4% in September, although this is significantly lower than the record 38.0% recorded in September 2023.
The IMF forecasted this month in its World Economic Outlook that Egypt’s economy will grow by 4.1% in calendar year 2025.
Analysts’ median currency predictions indicate that the Egyptian pound is expected to weaken to 50.4 per dollar by the end of June 2025 and to 52.0 by the end of June 2026.
Prior to allowing the pound to drop as part of the March 2024 IMF program, the central bank had maintained a fixed rate of 30.85 to the dollar. It is currently trading around 48.8 to the dollar.
Analysts also predict that the central bank’s overnight lending rate will decrease to 22.25% by the end of next June and to 14.25% by the end of June 2026.
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