Fitch Solution’s research unit BMI now sees the country’s growth accelerating to 5.3% in the current fiscal year, up 0.3 percentage points from their October forecast, BMI MENA Country Risk Senior Analyst Mariette Kas-Hanna said in a webinar attended by EnterpriseAM. “The main growth drivers in Egypt will be stronger investment as cost pressures and interest rates fall, normalizing imports and firmer exports,” Kas-Hanna noted.

Why it matters: This is only the latest growth projection upgrade to catch our attention, with the IMF only last week raising its prediction for the fiscal year to 4.7%, up 0.2 percentage points from its October projection. BMI’s outlook, however, stands out as the most optimistic and seems to be ahead of the Madbouly government’s expectation that the economy will grow “no less than” 5.0% in the 12-month period ending June.

The research unit sees decent progress on the inflation front, with headline inflation “trending down through the year” to near the upper end of the central bank’s 7% (±2 percentage points) target for 4Q 2026. Supporting the outlook is a stable EGP, which BMI forecasts to hold at between 47 and 49 against the greenback.

This cooling will allow the Central Bank of Egypt to be aggressive with its easing cycle, with BMI forecasting 600 basis points of rate cuts in 2026, followed by another 300 bps in 2027, BMI MENA Country Risk Senior Analyst Abdalla Saleh said. Crucially, falling interest rates will provide immediate relief to the government budget, as 35% of Egypt’s debt is short-term and highly sensitive to rate changes, they added.

Despite the optimism, Hanna warned of a growing reliance on portfolio inflows, which now account for half of Egypt’s total reserves, making the country “more sensitive to shifts in investor sentiment,” Kas-Hanna said. While portfolio inflows proved to be “resilient” in the 12-day war between Iran and Israel, future escalation could see this concern become an issue, she added.

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