World Bank (finally) raises our growth outlook for FY 2024-25: The World Bank sees the Egyptian economy growing at a 3.8% y-o-y clip during the fiscal year 2024-2025, raising its outlook 0.3 percentage points from its 3.5%forecastin October, the international lender said in its semi-annual MENA economic update — Shifting Gears: The private sector as an engine of growth in the Middle East and North Africa (pdf).

The rationale: The World Bank attributes the improved outlook to expectations of strengthening private consumption as inflationary pressures gradually subside. The lender sees Egypt’s inflation averaging 20.9% in the current fiscal year, down from 33.6% in FY 2023-24, supported by exchange rate adjustments earlier last year and elevated policy rates, with “favorable base effects will continue to play a role in the year-on-year drop in inflation.” The lender sees inflation hitting 15.5% in the upcoming fiscal year.

The World Bank noted Egypt’s growth slowed to 2.4% in FY 2023-24 — down 0.1 percentage points from its October estimate — due to weak manufacturing performance, subdued Suez Canal revenues, and import restrictions.

Suez Canal revenues remain under pressure: Suez Canal receipts are expected to fall to USD 3.7 bn this fiscal year — USD 5.1 bn below pre-Gaza war levels — as ships continue rerouting. As of February, traffic through the canal was still 54% below pre-October 2023 averages, the report read.

REMEMBER- Annual headline urban inflation rose in March to 13.6%, ending a four-month decline and marking a 0.8 percentage point increase from February’s 12.8%. Analysts expect a modest further uptick in April as Ramadan-related food price pressures linger, but the broader outlook remains tilted toward easing as core inflation continues to cool.

Despite the uncertainties, growth is on a stable trajectory: The lender maintained its FY 2025-26 growth outlook at 4.2% — unchanged from its October forecast and 0.3 percentage points shy of the Madbouly government’s 4.5% projection for the fiscal year.

REGIONALLY- The lender sees the MENA region’s growth reaching 2.6% this year, up from 1.9% in 2024, with GCC economies expected to grow 3.2% in 2025. Meanwhile, developing oil exporters are forecast to lag at 0.8%, and oil importers — including Egypt — are projected to expand by 3.4%. The rebound will be driven by higher oil output as OPEC+ accelerates rollback plans in May, alongside non-oil growth in Saudi Arabia, the UAE, and Oman.

There are multiple caveats to the improved regional outlook: Weather shocks, oil market volatility, regional fragility, and a potential global slowdown could all weigh on MENA’s recovery, the World Bank warned. For oil exporters, weaker demand and price swings could hit fiscal and external balances. Oil importers could benefit from cheaper oil but face risks from lower remittances, shaky consumer sentiment, and possible capital outflows.

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