EBRD trims Egypt’s growth forecast: 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 report (pdf). The lender also trimmed its forecast for the fiscal year ending June 2025 to 3.6%, a 0.4 percentage-point downgrade from its previous estimate.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

The EBRD sees a brighter 2026: The EBRD shared its first forecast for next year, projecting GDP growth to accelerate to 4.7% in 2026 and to reach 4.6% in the fiscal year 2025-2026 as investor confidence strengthens and reforms gain traction.

What about last year’s performance? 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.

The multilateral lender expects prices to cool down a bit in the coming period: “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.

Our external position looks promising, but risks remain: Egypt’s external position has strengthened in the wake of the Ras El Hekma agreement, however, “vulnerabilities remain,” the report noted.

Despite improvements, debt concerns remain front and center: 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 deb payments expected to take up 50-60% of government spending in the current fiscal year.

THE REGIONAL OUTLOOK- 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.

Tags: