Egypt’s Economic Growth Forecast: A Challenging Fiscal Year Ahead
Cairo – July 24, 2024: According to a recent Reuters poll, several economists are predicting Egypt’s economic growth to hit 4 percent during the current fiscal year (FY2024/2025). This projection aligns closely with other forecasts from the International Monetary Fund (IMF), the Egyptian government, and the World Bank.
Released on Tuesday, the Reuters survey reveals that economists expect growth to contract slightly, with the latest forecast marking a 0.35 percent decline compared to their April survey. James Swanston from Capital Economics emphasized that “The overall net impact is that economic growth will be weaker this fiscal year,” citing tighter fiscal and monetary policies combined with a weakened Egyptian pound.
While Egypt’s economic growth forecast of 4 percent is a modest setback, it’s only marginally lower than the IMF’s revised estimate of 4.1 percent. The World Bank and Egypt’s own projections stand at 4.2 percent. The World Bank attributed its relatively optimistic forecast to increased investment inflows, spurred by a landmark deal with the UAE concerning the property rights of Ras El Hikma—a coveted Mediterranean coastline area known for its potential in tourism and real estate development.
Despite these hopeful predictions, BMI Research reported a more conservative expectation, anticipating a growth rate of just 3.2 percent for the current fiscal year. This comes on the heels of Egypt’s economy growing by 2.9 percent in the previous fiscal year, which was a slight dip from an earlier prediction of 3 percent.
The Egyptian economy faces several challenges. Surveyed economists foresee the Egyptian pound weakening to 49.5 against the USD by the end of June 2025. Additionally, the poll predicts annual headline inflation to rise to 20.5 percent in FY2024/2025, before reducing to 12.05 percent in FY2025/2026.
Context and Background
This forecast occurs amid a period of economic turbulence for Egypt. The country has been grappling with the impacts of the COVID-19 pandemic, which severely disrupted global tourism—a sector that significantly contributes to Egypt’s GDP. In addition, the ongoing war in Ukraine has prompted fluctuations in global wheat prices, affecting Egypt, one of the world’s largest wheat importers.
The Egyptian government has been actively pursuing foreign investments and economic reforms to stabilize and grow its economy. Key initiatives include infrastructure projects, efforts to diversify energy sources, and legal reforms to improve the investment climate. These measures are part of Egypt’s broader Vision 2030 strategy, aimed at fostering sustainable development and economic resilience.
The Role of International Aid and Investments
International financial institutions like the IMF and World Bank have played a critical role in supporting Egypt’s economic stability. These institutions have provided substantial loans and financial assistance, contingent on structural reforms aimed at enhancing fiscal transparency and boosting private sector growth.
One noteworthy development is Egypt’s deal with the UAE involving Ras El Hikma. This agreement is expected to inject much-needed capital into the Egyptian economy, thereby fostering an environment conducive to growth.
As the Egyptian government continues to implement reforms and attract investments, the coming fiscal year will be a crucial period for determining the long-term trajectory of the nation’s economic health.
For more information on Egypt’s economic outlook and government initiatives, visit the Ministry of Finance of Egypt.
