CAIRO – 2 March 2025: The European Bank for Reconstruction and Development (EBRD) has revised its economic outlook for Egypt, lowering its 2025 GDP growth forecast to 4.2 percent—a 0.3 percentage-point drop from its previous estimate in September.
Additionally, the lender reduced its projection for Egypt’s fiscal year ending in June 2025 to 3.6 percent, reflecting a 0.4 percentage-point decline from earlier predictions, according to its latest Regional Economic Prospects report.
Despite the downgrade, the EBRD anticipates a recovery in 2026, forecasting GDP growth of 4.7 percent and 4.6 percent for FY2025/2026, citing improved investor confidence and ongoing economic reforms.
For the past year, the EBRD estimates that Egypt’s economy grew by 2.9 percent, revising its September forecast downward by 0.3 percentage points.
The report highlights an increase in economic activity in the first quarter of FY2024/2025, following a period of macroeconomic instability and currency volatility.
Growth is expected to be driven by key sectors, including communications, accommodation and food services, transportation and storage (excluding the Suez Canal), financial services, and manufacturing, which is showing signs of recovery after last year’s slowdown.
The EBRD also expects inflation to continue easing, with prices likely to decline further due to base effects and tight monetary policies, despite potential adjustments in fuel prices.
In January, the inflation rate stood at 24 percent—the lowest since December 2022.
The Ras El Hekma agreement has strengthened Egypt’s external position, but economic vulnerabilities persist, the EBRD cautioned.
While Egypt’s debt-to-GDP ratio is projected to decline to 85 percent in FY2024/2025, down from 96 percent the previous year, the country still faces high debt-servicing costs.
The lender estimates that 50 to 60 percent of government spending in the current fiscal year will go toward debt payments, keeping fiscal pressures elevated despite some improvements.
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