The World Bank sees the Egyptian economy growing at a 3.8% y-o-y clip for the current fiscal year, keeping its outlook unchanged from its previous forecast in April, the international lender said in its latest biannual Global Economic Prospects report (pdf). The bank also kept its growth forecast for the next fiscal year starting next month penciled in at 4.2% y-o-y.

The decision to keep forecasts stable gives us an insight into the impact of Trump’s refueling of the trade war with his April 2 “Liberation Day” tariff announcement. Egypt appears to have fared tariff uncertainty much better than some had feared and much better than some of our regional peers — some of which have also struggled with falling oil prices. Growth forecasts for the current year are 0.3 percentage points above the bank’s pre-trade war January forecast, while its forecast for the coming fiscal year has remained steady.

We also got the World Bank’s first growth forecast for FY 2026-2027, which sees the economy accelerating again at a 4.6% y-o-y clip.

The World Bank’s forecasts are more pessimisic than the Madbouly government’s predictions, which seeGDP growth cominginat a 4.0% y-o-y clip in FY 2024-2025, before rising to 4.5% in FY 2025-2026 and further to 5.0% in FY 2026-2027. Fitch Solutions’ research unit BMI is also more optimistic, along with IMF and EBRD, while S&P Global Ratings is less optimistic than the World Bank.

The report attributes the three consecutive annual upticks in growth to “stronger private consumption, higher private investment — spurred by the implementation of the investment deal with the United Arab Emirates and anticipated monetary easing — and a gradual rebound in manufacturing activity.” Macroeconomic stabilization, calming of political tensions, and tourism sector recovery were also highlighted as reasons why the bank expects growth to continue climbing.

Egypt’s current account deficit is also expected to narrow in FY 2025-2026, driven by a combination of lower oil and natural gas prices, strong remittances, and a “vibrant tourism sector,” the bank suggests. The non-oil trade deficit is also expected to shrink as “the effects of clearing import backlogs from FY 2024-2025 subside.”

But despite a broadly optimistic picture, fiscal deficits in oil importers like Egypt are projected to widen in 2025, which the bank partly attributes to “Egypt’s higher interest payments and decline in non-tax revenues” after a significant one-time increase from the Ras El Hekma agreement with the UAE. Deficits are expected to decline slightly in 2026, however, as “fiscal consolidation proceeds in Egypt in FY 2025-2026, by implementing a reduction in energy subsidies and enhancing tax revenue mobilization efforts.” Persistent inflation is also expected to keep poverty levels “elevated,” according to the report.

The region as a whole, however, has not fared trade tensions and a slump in oil prices as well as Egypt, with the World Bank’s latest forecasts for the Middle East and North Africa coming in at 2.7% y-o-y for the current fiscal year. Despite a marginal 0.1 percentage point upgrade from its April projection on the back of “an expansion of oil activity in oil exporters,” forecasts are still 0.7 percentage points below the World Bank’s pre-trade war January forecast and a whole 1.5 percentage points below the bank’s 2025 forecast before that.

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