Our domestic savings rate fell to 1.2% of GDP in FY 2024/25 from 6.1%

Egypt’s gross domestic savings rate collapsed to 1.2% of GDP in FY 2024/25, down from 6.1% the previous fiscal year — a 75% drop in a single year. This puts Egypt’s savings rate at a fraction of what high-growth emerging markets typically need to fund investment-led growth, according to a recent policy brief (pdf) from the Institute of National Planning (INP) and data from the Planning Ministry. In absolute terms, gross domestic savings fell to EGP 218 bn from EGP 848 bn the year before. Emerging economies typically require savings rates of 20-30% of GDP to strongly support investment, veteran banker and EG Bank board member Mohamed Abdel Aal tells EnterpriseAM.

Nothing left to save

It’s not a lack of financial discipline, but a lack of disposable income. “The drop in savings in Egypt is not due to a lack of planning for the future, but rather because the cost of the present has exceeded people’s capacity to endure,” banking veteran and Alraya Consulting and Training Managing Partner Hany Aboul Fotouh tells us. “A large portion of families no longer have anything left to save in the first place.”

Inflation has done the work. Egypt’s inflation cycle peaked at 33.9% in 2023 and has since moderated — Aboul Fotouh references April’sreading of 14.9% — but extended price pressure and repeated currency devaluations have compounded into a sustained erosion of household purchasing power, the INP brief notes.

Abdel Aal makes the same point: each round of price increases in food, energy, and services shrinks the disposable income available for saving. Aboul Fotouh frames the shift more starkly: “Saving shifted from an investment decision into an unavailable luxury. Many families are simply struggling to get through the month with the minimum possible losses.”

Filling the gap

The behavioral shift is structural. As inflation has run, the rapid expansion of buy-now-pay-later platforms, consumer finance products, and installment-based purchasing has weakened traditional savings behavior, the INP brief argues. Abdel Aal says the proliferation of installment-purchase apps and digital financing services has created a consumption pattern more reliant on borrowing than on saving.

When prices rise persistently, delaying a purchase becomes riskier than financing it. “Younger generations have become closer to the idea of ‘buy now, pay later’,” Aboul Fotouh says. “When the cost of goods rises continuously, delaying a purchase becomes riskier than buying on installment, because people fear tomorrow’s prices more than today’s installments.”

The macroeconomic implication is significant. Economic analyst Ahmed Shawky frames it as a structural risk: “The excessive expansion of consumer finance could shift the economy from a savings-and-investment economy to a debt-funded consumption economy. This will lead to a lower marginal propensity to save, an increase in current consumption at the expense of the future, a rise in non-productive consumer demand, and increased inflationary pressures. Of course, this represents a significant challenge for a country that needs to raise investment rates and increase domestic savings to finance growth.”

A mismatch

The macro picture doesn’t match the household picture, and this disconnect explains why positive macro numbers feel detached from the on-the-ground reality. Real GDP grew at 5.0% in 1Q 2026 and unemployment has fallen to 6.3% in 2025, but the country’s PMI recorded 47.1 in May — well below the 50 mark that separates expansion from contraction — and industrial production fell 2.0%. “This means the economy is still facing difficulties in generating a broad productive expansion capable of generating stable and real incomes sufficient for both consumption and savings together,” Aboul Fotouh tells us.

Why it matters, and what could fix it

Shrinking domestic savings means rising reliance on foreign capital. “The economy can withstand a temporary decline in savings, but it cannot rely over the long term on external financing, hot money, and foreign debt to compensate for weak domestic savings,” Aboul Fotouh says. Two other structural factors compound the problem: roughly 69% of bank credit is currently directed toward financing the fiscal deficit, limiting funding available for productive private-sector investment, according to the INP, and over 60% of Egyptians remain outside the formal banking system, weakening long-term savings channels like postal funds and pensions.

Abdel Aal argues the banking sector has acted as a buffer rather than a cause of the savings decline, pointing to high-yield CDs that helped preserve part of savers’ purchasing power during the inflation shock. The catch is structural: high interest rates can only encourage saving when households have income left over after meeting basic needs.

The INP’s policy prescription is broad, including explicit national savings targets, fiscal consolidation, preserving positive real interest rates, tighter oversight of consumer finance, expanding lending to productive sectors, modernizing pension and postal savings systems, broadening financial inclusion, and launching retail sovereign debt instruments aimed at attracting household savings. Several of these are already in motion — the CBE’s recent NBFI tightening addresses the consumer-finance oversight piece, and the IMF program is driving the fiscal consolidation — but the household-income side of the equation remains the binding constraint.

Recovery depends on confidence, not rates. “Families do not return to saving only when interest rates rise, but when they regain confidence that their income will retain its value for a reasonable period,” Aboul Fotouh tells us. The numbers to watch over the next four quarters are real wages, BNPL portfolio growth, the next CBE financial inclusion update, and whether the FY 2025/26 savings rate stabilizes.