The Economic Pulse

In the first half of Fy2024/2025, Egypt demonstrated notable economic resilience, with a significant rebound in growth and a continued commitment to fiscal consolidation and structural reforms. The country’s GDP expanded by 4.3% in the second quarter of FY 2024–25, nearly doubling the 2.3% growth recorded during the same period a year prior, signaling recovery from the previous year’s slowdown. This growth is underpinned by structural reforms aimed at macroeconomic stabilization and a strategic shift in public investment toward the tradable sectors of the economy.

As of early 2025, Egypt’s economy is showing signs of stabilization despite geopolitical and structural challenges. External liquidity has improved, inflation is easing, and monetary policy has become more accommodative. After a period of volatility, the macroeconomic environment is showing cautious optimism.

In early 2025, Egypt demonstrated economic resilience amidst monetary tightening and fiscal consolidation, successfully managing trade imbalances and FX rate fluctuations. The Central Bank of Egypt (CBE) held the discount rate at 27.75% in February despite varied global rate adjustments, reflecting improvements in economic growth, notably in manufacturing and transportation, which contributed to a decrease in unemployment from 6.7% to 6.4%. With inflation stabilizing and projected to decline. These measures, coupled with efforts to stimulate private sector activity, are central to Egypt's targeted recovery strategy, aiming to stabilize foreign reserves and encourage healthy investment flows.

Egypt’s economy in Q1 FY 2024/2025 reflected mixed performance as the country navigated trade imbalances, financial reforms, investment growth, and sectoral challenges. While FDI inflows increased, the economy faced a widening trade deficit, declining Suez Canal revenues, and continued external borrowing. Despite these challenges, macroeconomic reforms, customs facilitation measures, and monetary policies indicate a long-term strategy to improve Egypt’s competitiveness and financial stability.

In 2024, Egypt confronted a multifaceted economic scenario marked by robust reforms and substantial challenges. The nation faced high inflation, peaking at 35.7% in February 2024 , alongside a slowdown in real GDP growth to 2.4%, down from the previous year’s 3.8% reflecting a country's cautious yet transformative economic climate.

November 2024, saw significant progress in Egypt’s discussions with the IMF, which could unlock USD 1.3 billion in financing. The IMF has recognized substantial improvements in Egypt’s structural reforms, with tax revenues increasing by 36.7% (EGP 174.2 billion), reaching EGP 648.3 billion from July to October in FY2024/2025, compared to EGP 474 billion during the same period in FY2023/2024, according to the Ministry of Finance.

In October 2024, the Egyptian government considered adjustments to its IMF program to address economic pressures from shifting inflation, variable revenues, and evolving financial conditions to stabilize growth and enhance resilience amid regional and global challenges.

The Ministry of Planning and Economic Development recently announced new data on Egypt's macroeconomic performance for the fiscal year 2023-24, highlighting a mix of achievements and challenges. The country faced external pressures, including geopolitical tensions and supply chain disruptions, along with domestic contractionary policies aimed at stabilizing the economy. Despite these obstacles, key sectors such as tourism, foreign direct investment (FDI), and technology demonstrated resilience and growth, providing optimism for Egypt’s future economic prospects.

The IMF's latest country report on Egypt, released in August, deemed the country's performance for the third review as "satisfactory," with Egypt meeting half of the structural benchmarks, including a flexible exchange rate and increased tax and budget transparency. However, the country fell short in areas like timely publishing of annual audits and implementing quarterly fuel increases, prompting the IMF to adjust some benchmarks and extend deadlines.

Egypt is recalibrating its economy after securing a global bailout of approximately $57 billion, led by the IMF and United Arab Emirates, providing a pathway out of its worst economic crisis in decades. The IMF Executive Board recently completed the third review of Egypt's USD 8 billion loan program, enabling the government to draw the USD 820 million third tranche. This agreement, reached last month, faced a delay as the board reviewed the new government's approach to fuel subsidies, which were subsequently raised.

Egypt has made substantial progress in addressing its economic challenges, underlined by strategic steps in fiscal consolidation and commitments to economic enhancement. This is evident from the substantial developments across the political and economic landscape. Notably, the country has made significant strides in debt management, paying $25 billion since March 2024, which represents 7% of its GDP.

Egypt is making significant strides in overcoming its economic challenges. The government's dedication to these reforms is evident in the ongoing review of Egypt's USD 8 billion loan program, which underscores the positive contributions of the Ras El Hekma sale proceeds and state ownership policies. This review is anticipated to conclude by June 15, paving the way for the release of the third tranche of USD 820 million.

The Egyptian economy experienced a notable shift in its Balance of Payments (BOP), registering a deficit of US$ 409.6 million, contrasting sharply with the previous fiscal year's surplus of US$ 599.1 million. This change was primarily driven by a significant increase in the current account deficit, which reached US$ 9.6 billion, up from US$ 1.8 billion previously. Factors contributing to this surge included a rise in the trade deficit, declining remittances from Egyptians working abroad, and widening investment income deficit....

President Sisi's new term as President of Egypt has begun with a strong emphasis on implementing strategies to fortify the economy, enhance private sector participation, and achieve sustainable growth. Central to these efforts is the prioritization of key sectors such as agriculture, industry, information technology, and tourism. The government's ambitious goal is to achieve annual growth rates ranging between 6-8% by the end of President Sisi's third term...

The near-term macro-economic outlook indicates positive momentum in the market and a brief window for currency adjustment. The Egyptian government has secured a much-needed influx of foreign currency through a planned USD 35 billion investment from an Abu Dhabi-backed group, specifically in a major real estate project on Egypt's North (Mediterranean) coast at Ras El Hekma. This investment is expected to provide ample liquidity to cover Egypt's financing gap over the next four years. Coupled with the government's imminent closure of USD 12 billion in financing from the IMF and other development partners, this coordinated effort is poised to significantly strengthen the foreign exchange liquidity positions at the Central Bank of Egypt.

Egypt's economic landscape reveals a tapestry of significant developments, responding dynamically to both internal and external factors. The Central Bank of Egypt's strategic response to a drop in monthly inflation, down to 33.7% annually, includes a substantial 200 basis points increase in key policy rates. While this bold move aims to tackle inflation, concerns loom over potential impacts on purchasing power and the pricing dynamics of goods and services.

In 2023, Egypt confronted formidable economic challenges exacerbated by the repercussions of the Ukrainian war, leading to a substantial capital flight exceeding US$20 billion in portfolio investments. In the wake of this event resulted in a prolonged deficit in the capital account, posing a serious threat to the Egyptian economy amid increasing external debt obligations.

This month has proven to be a dynamic period for Egypt's economic landscape, featuring a combination of positive and challenging developments across various sectors.

October has been an extraordinary month filled with major events and critical policy developments, both in Egypt and across the region. These developments reflect a diverse spectrum of challenges and opportunities, collectively shaping the economic landscape.

The economic outlook for September 2023 reveals a complex mix of challenges, reforms, and investor responses. It included notable developments that raised questions and concerns about the country's economic stability and the progress of its reform efforts. Specifically, the International Monetary Fund (IMF) postponed the review of Egypt's $3 billion loan for the second time in a row; sparking a stir over Egypt's fiscal standing and its alignment with international expectations.