Growth almost doubled y-o-y in 2Q FY 2024-25, coming in at 4.3% for the three-month period, up from 2.3% during the same period last year, according to a statement from the Planning and International Cooperation Ministry. The figures mark an uptick from the slowdown seen in 2Q FY 2023-2024, which saw growth decline sharply from the 3.9% recorded a year earlier on the back of global economic headwinds and domestic challenges.

Driving the growth: The ministry attributes the recovery to a combination of “continued structural reforms aimed at maintaining macroeconomic stability, coupled with stringent governance of public investment that strengthen resilience and support shifting from a non-tradable to a tradable economy.”

Non-oil manufacturing continued to record positive growth for the third consecutive quarter, this time reaching 17.7%, compared to a contraction of 11.6% during the same quarter in the previous year. This was aided by an increase in private sector investments, higher merchandise exports, and a “rebound in real domestic credit to the private sector” — the rebound was particularly felt in the industrial sector. This, coupled with streamlined customs clearance for raw materials and production inputs led to increased industrial production, with the quarter seeing significant growth in key industries including motor vehicles (73.4%), ready-made garments (61.4%), beverages (58.9%), and textiles (35.3%).

The non-oil sector contributed 1.9 percentage points of the overall 4.3% growth achieved during the quarter.

Growth was felt across the board: Tourism (18%), ICT (10.4%), financial intermediation (11.6%), transportation and storage (9.4%), construction (4.8%), social services including healthcare and education (4.6%), ins. (4.6%), and electricity activities (3.9%) all posted positive growth levels throughout the quarter.

Suez Canal revenues fell 70% during the quarter due to a continued decline in the number of transiting vessels as geopolitical tension persists.

The energy sector also continued to contract during the quarter, with the extraction activity recording a 9.2% decline due to a slowdown in oil and natural gas production — oil production saw a 7.5% decrease during the quarter while natural gas production was down 19.6%.

Things should turn around soon as “investment in new discoveries and field development is expected to gain traction in the coming period.” The repayment of overdue arrears could have something to do with that — the Madbouly government paid some USD 1 bn in overdue arrears last month and made a similar payment in early January, building on a similar payout made in November, according to previous reports. The government has since agreed on a repayment schedule with international oil companies, with payments rolling out through June 2025.

Private spending once again exceeded public investment: Private investments rose by 35.4% y-o-y in 2Q FY 24-25 surpassing 50% of total investments, while public sector investments contracted by 25.7% during the quarter — accounting for less than 40% of total investments in Egypt during the period. This shift “highlights notable changes in Egypt’s investment landscape,” the ministry noted.

In the long(er) term: The Planning Ministry is projecting GDP growth of 4.0% for FY 2024-25, supported by private sector reforms and gradual economic recovery. “Private investments are expected to play a key role in sustaining this momentum, fostering a conducive environment for long-term growth,” the ministry said.

This is higher than others’ forecasts: The IMF sees the economy growing at a 3.6% clip during the current fiscal year. The World Bank is a tad less optimistic, having slashed this fiscal year’s growth forecast by 0.7 percentage points to 3.5%.

The story also caught the attention of the international press: Reuters | Bloomberg

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