The World Bank revised Egypt’s growth forecast for FY 2025-2026 to 4.3% y-o-y, marking a modest increase of 0.1 percentage points from its previous forecast in June, the international financial organization said in its latest Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) Economic Update report (pdf).

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

Despite the upgrade, the World Bank is still less optimistic than most about our growth prospects, with Fitch Solutions’ research unit BMI expecting the economy to grow 4.7% this fiscal year, the Madbouly government forecasting 4.5% growth, and the European Bank of Reconstruction and Development penciling in 4.4% for the fiscal year. But the World Bank is more optimistic than the IMF, which expects GDP to reach 4.1% in the 12-month period.

But the real good news is for our FY 2024-25 performance, in which the bank raised its GDP reading 0.7 percentage points from its previous projection to 4.5% y-o-y. The bank’s newest assessment for the fiscal year that ended in June puts growth as having increased 2.1 percentage points between FY 2023-24 and FY 2024-25.

The international lender attributed its upward revision to stronger-than-predicted growth in 1Q 2025, which hit 4.8%, boosted by favorable base effects as well as “renewed external support and the early fruits of macroeconomic reforms,” according to the report. The bank also highlighted the float of the EGP, fiscal discipline, and public investment caps, along with subsidy reform as key components of these reforms and pointed to increases in exports, private consumption, and private investment as helping drive the headline figure up.

The bank also raised its growth forecast for the next fiscal year by 0.2 percentage points from previous expectations and now projects growth reaching 4.8% y-o-y.

Although forecasts are up, the road ahead is still challenging, with the report noting that the war on Gaza had significant spillovers on Egypt, including gas import disruptions, a dip in tourism flows, and Red Sea disruptions that resulted in USD 11 bn of foregone Suez Canal revenues between December 2023 and July 2025. The World Bank also points to the nearly tripling of the country’s refugee and asylum seeker population between 2022 and 2024.

The bank is also expecting inflation to stay elevated, forecasting 14.6% y-o-y for the current fiscal year, despite dropping for the third straight month in August to 12.0% y-o-y. The central bank and most analysts we’ve spoken to are more optimistic and are in general agreement that the economy is making progress toward the CBE’s 7% y-o-y (± 2 percentage points) target for 4Q 2026.

Egypt’s current account deficit is expected to narrow again by 0.6 percentage points to 3.8% in the current fiscal year, which the lender attributed in its previous forecast to lower oil and natural gas prices, robust remittances, and a “vibrant tourism sector.” Our fiscal deficit is also seen tightening by 0.7 percentage points to hit 6.7% in FY 2025-26, according to the report.

The region as a whole has also shown some signs of recovery, with the World Bank’s latest forecasts for MENAAP now expecting GDP to average 2.8% in 2025, marking a marginal increase of 0.1 percentage point from its June forecast. The upward revision is backed by “stronger oil activity, resilient non-oil sectors, and a rebound in agriculture and tourism,” the lender said. Regional GDP growth is also expected to accelerate further to 3.3% next year and 3.8% in 2027.

Tags: