The European Bank for Reconstruction and Development (EBRD) has slightly raised our growth forecast for 2025 to 4.5% from 4.4% in its April forecast, according to its latest Regional Economic Prospects report (pdf). The bank has left its forecast for the current fiscal year ending in June 2025 unchanged at 4.0%.

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The bank is less optimistic about 2024: The EBRD now sees the country growing at a 3.2% clip in 2024, down 0.7 percentage points from its April forecast. The multilateral lender has also trimmed its growth estimate for the last fiscal year ending in June 2024 to 2.7%, down 0.3 percentage points from its forecast earlier this year.

Thank sectoral growth for the optimistic medium-term outlook: “Growth in the retail and wholesale trade, agriculture, communications and real estate sectors counterbalanced sharp contractions in the gas and non-oil manufacturing industries,” the report said.

Energy sector disruptions and investment delays threaten Egypt’s outlook: Disruptions in the energy and electricity sectors and delays in the implementation of structural reforms under Egypt’s commitment to the IMF pose risks to the country’s economic recovery, according to the EBRD. The slow recovery of investment has also hindered economic progress. Egypt's external accounts, however, have seen improvement since the float of the EGP in March 2024 thanks to increased inflows from international investors and partners driving FX reserves to a five-year high.

Less optimistic than most: EBRD’s forecast for the current fiscal year is slightly below the 4.1% the IMF has penciled in for the year and the government’s 4.2% growth target.

The regional outlook: The EBRD sees the SEMED region growing at a 2.8% clip this year, down 0.6 percentage points from April’s forecast thanks to “the ongoing conflict in Gaza and Lebanon and severe droughts in Morocco and Tunisia.” Jordan’s economy is expected to grow 2.2% this year and Lebanon’s to contract by 1%. Morocco is expected to see growth of 2.9% in 2024 and 3.6% in 2025 due to improvements in manufacturing and tourism. Tunisia, however, continues to struggle with modest growth expectations of 1.2% in 2024 — which is expected to rise to 1.8% in 2025 — due to its current fiscal position and external debt, despite “stronger remittances, tourism receipts and lower imports.”

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