{"id":670720,"date":"2025-08-25T00:00:00","date_gmt":"2025-08-25T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2025\/08\/25\/bmi-sees-growth-accelerating-to-4-7-this-fiscal-year\/"},"modified":"2025-08-25T00:00:00","modified_gmt":"2025-08-25T00:00:00","slug":"bmi-sees-growth-accelerating-to-4-7-this-fiscal-year","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2025\/08\/25\/bmi-sees-growth-accelerating-to-4-7-this-fiscal-year\/","title":{"rendered":"BMI sees growth accelerating to 4.7% this fiscal year"},"content":{"rendered":"<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"> <strong>Fitch Solutions\u2019 research unit BMI sees the country's GDP growth <\/strong><strong>accelerating to 4.7% i<\/strong><strong>n the fiscal year 2025-2026<\/strong>, thanks to robust domestic consumption, a surge in investments, and strong exports, it said in its latest country risk report for Egypt. The economic growth is expected to edge up further to 5.0% next fiscal year.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Unpacking the drivers of growth: <\/strong>BMI anticipates a rise in social spending and higher wages across both private and public sectors which will keep domestic demand strong. The research unit also forecasts a slowdown in inflation, a decline in borrowing costs, an increase in saving instruments\u2019 returns, and a strong rise in <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/56c93d8d-483b-4693-b687-ecc4afd58426\/%253cmark%253e%253c%2Fmark%253eremittances%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253ereach%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253eall%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253etime%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253emay%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253ehigh%253cmark%253e%253c%2Fmark%253e\" style=\"\" rel=\"noopener\">remittance<\/a> inflows. Also, July\u2019s <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/2b5c8df1-53fe-4791-9ba9-dfb8f7c9060b\/non-oil-private-sector-contraction-eases-in-july-amid-signs-of-recovery\" style=\"\" rel=\"noopener\">PMI reading<\/a> \u201cedged closer to the 50 mark \u2014 which usually coincides with a growth rate of about 4.0%,\u201d the report noted. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>First uptick in investment in three years: <\/strong>BMI expects investments to rise for the first time in three years, driven by a reduced global uncertainty \u2014 particularly regarding the US tariffs\u2014 some easing of geopolitical tensions, lower interest rates, and an increase in FDI inflows. Looking ahead, investment activity is expected to rise gradually between 2026 and 2034, supported by foreign investment and ongoing efforts to improve the business climate, though public investment will be constrained by fiscal consolidation.<\/p>\n<p class=\"tag-border-left\">OTHER KEY MACROECONOMIC TAKEAWAYS-<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#1- Inflation is expected to maintain a downward trajectory through 2H 2025<\/strong> and into 2026, buoyed by a stable currency and completed fiscal consolidation. Softer inflation in July prompted BMI to lower its forecast for average inflation for the year from 15.3% to 14.4%. The research unit expects inflation to slow further in August and September, before slightly edging higher in 4Q on the back of expected hikes in electricity prices in October and fuel prices in November, averaging 12.5% in 2H. Looking ahead, inflation is expected to average 10.0% next year, falling within the Central Bank of Egypt\u2019s 5.0%-9.0% target by 4Q 2026.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#2- EGP is expected to hold <\/strong><strong><a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/771ea318-334f-4d64-a428-99d00fb55eb9\/capital-economics-sees%253cmark%253e-egp%253c%2Fmark%253e-rally-boosting-gdp,-narrowing-current-account-gap\" style=\"\" rel=\"noopener\">recent gains<\/a><\/strong>, trading between EGP 48-50 to the greenback in the near-term, provided portfolio inflows remain strong over the coming months.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#3-<\/strong> <strong>FX reserves are projected to keep increasing, surpassing USD 50.0 bn by 2026 <\/strong>\u2014 enough to cover about four months of imports. Foreign reserves <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/f346367b-33ce-4d6a-b1ba-68e8e49edcb1\/%253cmark%253eforeign%253c%2Fmark%253e%253cmark%253e-reserves%253c%2Fmark%253e-increase-to-usd-49-bn-in-july\" style=\"\" rel=\"noopener\">rose<\/a> to USD 49.0 bn at the end of July, marking a USD 335.8 mn increase from June.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#4- Our external position is expected to strengthen<\/strong>, with the current account deficit projected to narrow to 3.6% of GDP in FY 2025-26 and 3.1% of GDP in FY 2026-27. This improvement will be fueled by robust growth in exports, driven by competitiveness gains following the float of the EGP in March 2024, a recovery in <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/799756ca-48c5-4dab-85ed-6530551cb65d\/our-first-look-at-the-economy%25e2%2580%2599s-performance-last-fiscal-year\" style=\"\" rel=\"noopener\">Suez Canal<\/a> revenues, strong <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/56c93d8d-483b-4693-b687-ecc4afd58426\/%253cmark%253e%253c%2Fmark%253eremittances%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253ereach%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253eall%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253etime%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253emay%253cmark%253e%253c%2Fmark%253e-%253cmark%253e%253c%2Fmark%253ehigh%253cmark%253e%253c%2Fmark%253e\" style=\"\" rel=\"noopener\">remittances<\/a>, and <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/1e416704-badf-4814-8885-956769e235d3\/current-account-deficit-narrows-to-usd-13.2-bn-in-9m-2024-25\" style=\"\" rel=\"noopener\">tourism<\/a> revenues.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>DATA POINT- Exports to the US jumped 15% y-o-y in 1H 2025<\/strong>, BMI noted, citing US trade data. This was primarily driven by a significant growth in food and apparel shipments, alongside minerals and metals. \u201cThis export momentum is supported by Egypt\u2019s more competitive pricing from currency depreciation and favourable 'reciprocal' tariffs compared to Asian textile exporters.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#5- Public debt ratio to GDP is projected to fall from 88.3% at the end of June 2025 to <\/strong><strong>84.3% by the end<\/strong><strong> of FY 2026-27. <\/strong>This will be largely driven by robust nominal GDP and sustained primary fiscal surplus.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#6- Interest payments \u2014 the largest spending item \u2014 are expected to fall from about 50% <\/strong><strong>of t<\/strong><strong>otal expenditure to 46%<\/strong>, and from 73% of revenue to 63% by the end of June 2027. The forecast is based on the expectation that lower oil prices, subsidy reforms, and reduced debt servicing will alleviate pressures on government spending.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#7- Egypt\u2019s fiscal deficit is seen narrowing to 6.6% of GDP in FY 2025-26<\/strong>, and 6.1% of GDP in the following FY. This projected deficit is significantly narrower than both the long-term average of around 10% and the recent average of 7.0% of GDP, according to the report. <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>#8- Revenue growth is expected to average 14.5% over the next two fiscal years<\/strong>, as officials introduced reforms to VAT and are finalizing a <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/05369f08-b02a-43df-9799-1219c912d0fd\/no-new%253cmark%253e-taxes%253c%2Fmark%253e-are-planned-in-overhaul-expected-to-kick-off-in-4q\" style=\"\" rel=\"noopener\">plan<\/a> to overhaul the tax system. The optimistic outlook is also supported by a pick-up in economic activity, and the expectation that upcoming privatization moves will further boost government revenues in the short term.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">LONG-TERM GROWTH PROSPECTS IN FOCUS-<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>BMI sees GDP growth averaging 4.6% y-o-y between 2026 and 2034.<\/strong> This marks quite the increase when compared to the average recorded between 2010 and 2019 \u2014 3.8%. This growth will be mainly underpinned by expanding private consumption, which is projected to remain the largest contributor to GDP, reaching about 87% by 2034.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Despite these positive developments, challenges persist: <\/strong>Challenges include a high level of state involvement in the economy, sluggish progress on privatization, and weak financial inclusion, according to the report. BMI noted that despite the government making progress on several IMF commitments, delays in structural reform \u2014 particularly the privatization of state and military-owned companies \u2014 have postponed program reviews.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>REMEMBER- <\/strong>The IMF has merged its fifth review of Egypt\u2019s USD 8 bn loan program, originally scheduled for May, with its sixth review, which is now set for October.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Key risks and opportunities for Egypt: <\/strong>Upside risks for our economy depend on faster progress in reforms, new hydrocarbon discoveries, and improvement to the business environment.<strong> Downside risks<\/strong>, on the other hand, include slower reform implementation, continued high unemployment, rising geopolitical instability, and external shocks.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\">\n<p class=\"tag-border-left\">ALSO FROM THE REPORT- <\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Diverse inflow to help bridge external shortfall:<\/strong> Egypt is expected to cover its external funding shortfall and around USD 15 bn in annual debt repayments over the next two years through a combination of debt and investment inflows, BMI noted. To do so, officials intend to issue <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/f9343282-fd58-4a7e-8e67-471e616b077a\/egypt-eyes-usd-4-bn-bond-issuance-to-address-funding-gap\" style=\"\" rel=\"noopener\">USD 4 bn<\/a> in international debt, while Qatar is set to invest <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/fe6a9b19-a7af-4a2a-ad8d-03ce448dae96\/%253cmark%253eqatar%253c%2Fmark%253e-nears-usd-4-bn-agreement-to-develop-sahel-mega-tourism-project\" style=\"\" rel=\"noopener\">USD 4 bn<\/a> in a major tourism development on the North Coast. Additionally, the government retains access to USD 4.7 bn from the IMF under Egypt\u2019s <a target=\"_blank\" href=\"https:\/\/enterprise.news\/egypt\/en\/news\/story\/e77b3616-8ca5-41b0-b0a7-8b2aa20b81ab\/finmin-expects%253cmark%253e-imf%253c%2Fmark%253e-reviews-to-wrap-up-this-fall,-unlocking-usd-2.5-bn-disbursement\" style=\"\" rel=\"noopener\">USD 8 bn IMF loan program<\/a>, which will expire in October 2026.<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>Portfolio inflows will remain central to bridging our financing gap: <\/strong>Improving fundamentals and attractive returns have eased investor risk perceptions, driving significant inflows to the country in recent weeks. BMI said that \u201coffered yields will remain attractive for investors, keeping their appetite for Egyptian debt instruments strong.\u201d<\/p>\n<p style=\"padding:0;margin:0;line-height:1.15;orphans:2;widows:2;text-align:left\"><strong>But take care, an external shock could lead to a renewed crisis<\/strong>, BMI noted, warning that heavy reliance on volatile hot money will make Egypt more vulnerable to external shocks and shifts in investor sentiment. The research unit estimates that USD 20-25 bn are at risk of outflows in the event of external shocks. \u201cPronounced risk-off sentiment towards emerging markets and a surge in geopolitical risks \u2014 much higher than during the 12-day Iran-Israel war, when portfolio investment proved resilient \u2014 would risk a balance of payments crisis in the country.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Egypt\u2019s fiscal deficit is seen narrowing to 6.6% of GDP in FY 2025-26, and 6.1% in FY 2026-27<\/p>\n","protected":false},"author":1,"featured_media":670721,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7206],"tags":[104,72,348],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-670720","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-economy","tag-enterpriseam","tag-gdp","wpautop","entry"],"acf":{"mongo_id":"ba7f4f88-f267-4075-bbc4-85eb22f78c54","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/4\/754.jpg","photo_position":"above","homepage_title":"","full_issue_title":"BMI sees Egypt's growth accelerating to 4.7% this fiscal year","related_issue":[670712],"teaser":"Egypt\u2019s fiscal deficit is seen narrowing to 6.6% of GDP in FY 2025-26, and 6.1% in FY 2026-27","voice_url":"https:\/\/s3.us-east-1.amazonaws.com\/ent.news\/audio\/2025\/8\/.83d58850-17af-46fd-b31f-31ac8088c1a6.mp3"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.1.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>BMI sees growth accelerating to 4.7% this fiscal year - EnterpriseAM Egypt<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterpriseam.com\/egypt\/2025\/08\/25\/bmi-sees-growth-accelerating-to-4-7-this-fiscal-year\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BMI sees growth 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