The economy grew 5.3% during the first quarter of the current fiscal year, up from the 3.5% recorded during the same period last year, according to a Planning Ministry statement.

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

REMEMBER- The economy grew at a 4.4% clip during the fiscal year 2024-2025, outpacing the 4.2% targeted in the draft budget and the 2.4% growth recorded in FY 2023-2024.

TL;DR: The acceleration “reflects the tangible impact of ongoing economic and structural reforms that are bolstering the real economy, crowding in private-sector activity, and steering the growth model toward tradable, high-productivity sectors such as manufacturing, tourism, and telecommunications,” the statement read.

Key drivers: This growth was driven by expansion across a number of sectors, topping the list are non-oil manufacturing and CIT, which grew by an equal rate of 14.5%, tourism (13.8%), and financial intermediation (10.2%). Ins., electricity, social services, trade, and agriculture also made the list. There was also Suez Canal activity, which grew 8.6% during the three-month period for the time since 2Q FY 2023-24.

The higher GDP growth was largely expected as economic activity continues to normalize and regain momentum on the back of better USD availability, predictability, and confidence, Thndr Securities’ Esraa Ahmed told EnterpriseAM. “Performance is in line with our expectations of an acceleration in growth for the year to around 5.4%, which could be exceeded if Suez Canal recovers faster than expected,” she added.

Tourism growth during the quarter was supported by promotional campaigns, improved quality of services and tourism infrastructure, in addition to the digital transformation and artificial intelligence technologies being adopted to enhance the tourist experience. Egypt welcomes 5.1 mn tourists during the quarter and the figure is expected to grow some more in the coming quarters, especially with the opening of the Grand Egyptian Museum, which is expected to attract about 5 mn visitors annually.

Non-oil manufacturing maintained its recovery during the quarter, with several activities seeing growth — motor vehicles grew 50%, chemical products grew 44%, beverages recorded growth of 37%, the furniture industry jumped by 34%, pharma by 19%, and ready-made garments by 17%.

The extraction sector declined 5.3% during the three-month period on the back of contraction in both oil and natural gas activities. However, the pace of contraction eased y-o-y, during the same period last year the sector contracted 8.9%. “This improvement is due to recent discoveries of gas fields and exploratory wells, with nearly 75 new oil and gas discoveries since August, and 383 new wells added to the production map,” the statement read.

Excluding crude oil and natural gas extraction, growth was fairly broad-based, with official figures backing anecdotal company-level evidence pointing to a solid recovery in private consumption and investment, Al Ahly Pharos’ Head of Research Hany Genena told EnterpriseAM. He said the growth acceleration in 1Q FY 2025-26 pushed real GDP growth above its long-term potential of 4.3%, reflecting a rebound from the previous two years of below-potential growth.

Private investments soared to 66% of total executed investments, recording 25.9% y-o-y growth during 1Q of the current fiscal year. Meanwhile, public investments declined to 34% of total investments, reflecting the state’s direction to enhance private sector participation in the economy.

What about foreign trade? Exports showed a relative improvement, with both goods and service exports growing 1.3% during the quarter. However, imports rose at a faster pace, increasing 9.4%.

The bigger picture: The Madbouly government sees the economy growing “no less than” 5.0% this fiscal year, up from 4.4% last fiscal year.

Tags: