The International Monetary Fund now sees Egypt’s growth coming in at a 3.8% y-o-y clip this fiscal year, up 0.2 percentage points from its January forecast, according to the fund’s World Economic Outlook report (pdf). Its projection for the coming fiscal year was also up, likewise coming in 0.2 percentage points higher from its previous projection to 4.3% y-o-y.

The upgrade is a vote of confidence in Egypt’s post-float reforms, Planning and International Cooperation Minister Rania Al Mashat said. “Despite global risks stemming from trade wars and protectionist policies, Egypt’s push for structural transformation and sustainable growth — led by the private sector — enables it to maintain positive growth rates,” she said. Al Mashat also reiterated her ministry’s forecast that the economy will grow quicker than the Fund expects, coming in at 4.0% y-o-y clip for the fiscal year.

The shift from a non-tradeable to a more tradeable economy has helped push the scales, which has already been reflected in strong 2Q FY 2023-24 figures showing growth of 2.1 percentage points y-o-y to 4.3%, Al Mashat added. The minister also pointed to a reduction in public investment spending that has helped shore up macro stability and improve the business climate. The uptick came with a rebound in tourism, growing ICT industry, and the logistics sector, despite a continued decline in Suez Canal revenues.

However, the regional outlook was not as promising, with the fund seeing growth across the MENA region reaching 2.6% y-o-y in 2025, down a whole 0.9 percentage points as Trump’s trade war and the downturn in oil prices takes its toll. Its regional outlook for 2026 was also scaled back, slowing 0.5 percentage points to 3.4% y-o-y.

It’s still too early to tell what impact tariffs will have on Egypt, but the state is monitoring developments and is ready to revise forecasts if needed, Al Mashat added. The minister also pointed to ongoing reforms and a more tradable economy as helping bolster the country’s resilience to external shocks.

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The IMF also sees inflation continuing to dip this fiscal year, pencilling in a monthly average of 19.7% y-o-y. This a decent step up from the 9M monthly average of 22.8% y-o-y, according to EnterpriseAM calculations using data from state statistics agency Capmas. The projection also indicates that — in contrast to an expected 4Q uptick by some analysts — inflation will continue to fall from the 13.6% recorded in March for the coming three months.

Inflation is seen slowing again in the coming fiscal year to a 12.5% clip, bringing the country closer to the Central Bank of Egypt’s inflation target of 7% (±2 percentage points) inflation for 4Q 2026.

But it’s not all good news, with the current account deficit expected to widen to 5.8% of GDP in the current fiscal year, up from 5.4% last year, before tightening to 3.7% in 2026, the report reads. Unemployment is also expected to edge up from 7.4% in the last fiscal year to 7.7% this FY and the next.

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