Egypt enters 2026 on a solid macroeconomic footing, driven by expected growth in FX inflows, cooling inflation, and “tangible progress” on its ongoing reform program, Standard Chartered said in a note to clients.

The bank now sees the EGP strengthening, revising its exchange rate forecast to EGP 47.50 to the greenback by the end of 1Q 2026, compared to its previous forecast of EGP 49.00. Standard Chartered expects the exchange rate to weaken by the end of the year to EGP 49.00 / USD against its previous projection of EGP 51.

This is hardly a fluke: The currency’s expected strengthening is backed by long-term GCC investments and the continued momentum of the government’s privatization program. Egypt has recently received the the USD 3.5 bn cash portion of the Alam El Roum development agreement from Qatari Diar. The government has reportedly set a target to raise USD 3-4 bn by October 2026 through privatization, with expected transactions including Banque du Caire, Safi, Wataniya, and the remaining stake in Bank of Alexandria. The Gabal El Zeit wind farm is also reportedly on the auction block. EGX head Islam Azzam said the EGX expects at least eight new offerings in 2026, including players in the healthcare and tourism sectors.

The expected disbursement of a USD 2.5 bn IMF tranche in early 2026 will also bolster FX reserves and provide further momentum for the reform program, Standard Chartered said.

Easing inflation + rising GDP growth

The bank expects inflation to hit 11% by the end of 1H 2026, driven by lower commodity prices and improved local supply conditions. This cooldown will grant the Central Bank of Egypt (CBE) the necessary room to begin cutting interest rates, thereby slashing financing costs for businesses. Inflation, which was nearly halved to a record 12.3% at the end of last November compared to January’s reading, gave the CBE room to implement broader rate cuts totaling 725 bps throughout 2025.

Meanwhile, real GDP growth is expected to accelerate to 4.5% in the current fiscal year, fueled by manufacturing, trade, and hydrocarbons. The bank links the anticipated economic recovery this year to the normalization of Suez Canal revenues and supply chains — a variable that remains contingent on a de-escalation of regional geopolitical tensions.

What to look for

Stability is the name of the game: The focus for Egypt in the year ahead is on “restoring predictability” — the most valuable currency for investors seeking long-term business sustainability, CEO and Head of Coverage of Standard Chartered Egypt Mohamed Gad said. “With inflation easing and external balances strengthening, we expect confidence to build further across the private sector, unlocking new opportunities for growth and long-term investment,” Gad said.

Tags: