The International Monetary Fund (IMF) has lowered its forecast for Egypt’s economic growth for the current and coming fiscal years, citing global economic challenges and domestic policy adjustments.

According to the report, Egypt is expected to see growth of 2.7% in FY2024/2025 and a slightly improved 4.1% in FY2025/2026, marking a revision from earlier projections of 3.0% and 4.4%, respectively.

The IMF also emphasized the need for emerging markets, like Egypt, to manage risks associated with currency and capital flow volatility.

“Given that economic fundamentals remain the main factor in dollar appreciation, the appropriate response is to allow the exchange rate to adjust, while using monetary policy to keep inflation close to target. Foreign reserves should be used prudently and preserved to deal with potentially worse outflows in the future,” the report wrote.

Globally, growth projections remain stable at 3.2% for 2024 and 3.3% for 2025, mirroring earlier estimates despite developing inflationary pressures and geopolitical tensions.

The world economy is navigating a “sticky spot,” with slowing disinflation and the looming specter of prolonged high interest rates, according to the IMF.

“The momentum on global disinflation is slowing, signaling bumps along the path…The good news is that, as headline shocks receded, inflation came down without a recession. The bad news is that energy and food price inflation are now almost back to pre-pandemic levels in many countries, while overall inflation is not,” the IMF explained.

While global inflation is anticipated to ease to 5.9% this year, down from 6.7% in 2023, challenges persist, particularly in advanced economies like the US, where inflation reduction efforts have stagnated.

The IMF recently postponed its $8 billion loan program review for Egypt, scheduled for last week, pushing the review to July 29. While the Egyptian government refrained from offering an official reason for the delay, a finance ministry source told media that ongoing negotiations were impacted by the recent cabinet shuffle.

Last month, the World Bank affirmed its forecast for Egypt’s growth for the current fiscal year, predicting a 4.2% growth rate for FY2024/2025, while estimating a slight bump for FY2025/2026 to 4.6%.