Gov’t lowers medium-term economic growth target to 6.8%

Regional wars and economic shocks have forced the government to temper its medium-term economic targets, lowering its growth target to 6.8% by FY 2029/30, down from a previously targeted 7.5%, according to a government planning document reviewed by EnterpriseAM. The downward revision reflects the toll of Red Sea disruptions, falling Suez Canal revenues, and global supply chain shocks.

Why it matters: Call it a much-needed reality check that finally shelves the optimistic projections of the past. The government’s new “cautious-ambitious” scenario is essentially a tacit admission that ongoing regional conflicts and global inflation have made those older, loftier targets impossible to hit.

The revised numbers

Growth and income: The government is now targeting real GDP growth of 5.4% in FY 2026/27, compared to an estimated 5.2% in the current FY. Per capita real GDP is expected to grow by nearly 4% in FY 2026/27, climbing to 5.4% by the end of the medium-term plan.

Investment and savings: The government plans to gradually expand investment activity, projecting a 35.1% jump in total investments to EGP 4.17 tn in FY 2026/27, up from an estimated EGP 3.1 tn in the current FY. This figure is expected to rise steadily to EGP 7.2 tn by the end of the medium-term period. This aims to raise the investment-to-GDP ratio from an estimated 14.5% to 17% in FY 2026/27, eventually reaching 19.6% by FY 2029/30. Meanwhile, the domestic savings rate is projected to jump from 10.5% to 14.6% by the end of the decade.

IN CONTEXT- Our gross domestic savings rate collapsed to just 1.2% of GDP in FY 2024/25, down from 6.1% a year earlier and a fraction of the 20-30% that high-growth emerging markets typically need to fund investment-led growth, veteran banker and EG Bank board member Mohamed Abdel Aal told EnterpriseAM earlier this month. In absolute terms, that’s a fall from EGP 848 bn to EGP 218 bn in a single year.

FX flows and trade: The strategy targets increasing net foreign direct investment to USD 13 bn in FY 2026/27 and pushing it to USD 25 bn by FY 2029/30. The government is also targeting an average annual growth rate of 13.3% for merchandise exports, alongside measures to rationalize imports.

Social targets: The government aims to bring inflation down from approximately 19.9% in FY 2024/25 to 9.3% in FY 2026/27 before it settles at 6.9% by FY 2029/30.

What’s next: The revised framework lands in the Senate today before moving to the House for final review before the end of the month.