The EBRD has revised Egypt’s GDP growth forecast for 2025 down to 4.2%, reflecting economic challenges. However, a rebound is projected for 2026, with estimated growth of 4.7%. Inflation is also expected to decline, although high debt levels remain a concern, with a significant portion of government spending directed toward servicing debt obligations.
On March 2, 2025, the European Bank for Reconstruction and Development (EBRD) announced a revision of its GDP growth forecast for Egypt for 2025, lowering it to 4.2 percent, which represents a decline of 0.3 percentage points from predictions made in September. The institution also adjusted its projection for the fiscal year ending June 2025 downwards to 3.6 percent, a decrease of 0.4 percentage points from prior estimates, as detailed in its latest Regional Economic Prospects report.
Despite these downward adjustments, the EBRD is optimistic about a recovery in 2026, projecting GDP growth of 4.7 percent and 4.6 percent for the FY2025/2026 fiscal year. This anticipated rebound is attributed to improved investor confidence along with the ongoing implementation of economic reforms. In its assessments, the EBRD noted that Egypt’s economy had grown by 2.9 percent over the past year, which is a downward revision of 0.3 percentage points from earlier forecasts.
The report indicates a resurgence in economic activity during the first quarter of FY2024/2025, following a period characterized by macroeconomic instability and currency fluctuations. Key sectors expected to drive this growth include communications, accommodation and food services, transportation and storage (excluding the Suez Canal), as well as financial services and manufacturing, which is showing signs of recovery after last year’s slow down.
Moreover, the EBRD anticipates a continuing decline in inflation, projecting further price reductions due to base effects and stringent monetary policies, notwithstanding potential alterations in fuel pricing. As of January, the inflation rate in Egypt stood at 24 percent, marking the lowest level since December 2022.
The institution acknowledged that the Ras El Hekma agreement has bolstered Egypt’s external economic position; however, it also warns that vulnerabilities remain. While the debt-to-GDP ratio is forecasted to decrease to 85 percent for FY2024/2025 from 96 percent in the previous year, the country still confronts high debt-servicing costs. The EBRD estimates that 50 to 60 percent of government spending in the current fiscal year will be dedicated to servicing debt, perpetuating fiscal pressures despite noted improvements.
The EBRD has issued a revised economic outlook for Egypt, citing a decrease in GDP growth forecasts for 2025 and highlighting ongoing economic vulnerabilities, specifically regarding high debt levels. Nonetheless, potential recovery is anticipated in 2026, driven by sustained growth in critical sectors and improved market conditions. Inflation is also expected to ease, contributing to a more stable economic environment moving forward.
Original Source: www.egypttoday.com
