In its recently released Regional Economic Prospects report, the European Bank for Reconstruction and Development (EBRD) updated its forecast for Egypt’s economic growth, highlighting a cautious recovery as the country adjusts from a period of crisis.

The report expects Egypt’s growth for FY2024/2025 will climb to 4%, reflecting an ongoing recovery phase. The bank estimated that growth in FY2024/2024 reached 2.7%.

On a calendar-year basis, Egypt's economy is projected to grow by 3.2% in 2024, with an optimistic increase to 4.5% in 2025.

Despite persistent inflation challenges, there are signs of moderation; inflation dropped to 25.7% in July 2024, down from a peak of 38% in September 2023.

This easing inflation is attributed to growth in key sectors such as retail and wholesale trade, agriculture, communications, and real estate, which have helped mitigate declines in the gas and non-oil manufacturing sectors.

The country’s external accounts have shown improvement following the devaluation of the Egyptian pound in March 2024, explained the EBRD, bolstered by increased financial inflows from international partners and investors. As a result, foreign exchange reserves have reached their highest levels in five years, providing a buffer against potential economic shocks.

Continued disruptions in the energy and electricity sectors and delays in implementing necessary structural reforms as part of an International Monetary Fund (IMF) program could pose challenges to sustained growth, it added.

Earlier this month, Fitch Solutions reaffirmed its growth forecast for Egypt in FY 2024/2025, predicting an increase to 4.2%, driven by increased investment and a rebound in the manufacturing sector. Ramona Moubarak, Fitch Solution’s Head of MENA Country Risk, noted in a September LinkedIn post that the expected resolution of the Gaza conflict by late 2024 would further support economic recovery.

Minister of Investment and Foreign Trade Hassan El Khatib also projected a GDP growth rate of 4.2% for the current fiscal year during a cabinet meeting in August.

Following the IMF's third review of Egypt’s Extended Fund Facility (EFF) in July, the Fund revised its growth forecast to 4% for FY 2024/2025, with inflation expected to drop below 15%.