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.

The non-oil manufacturing sector posted an impressive 17.7% growth, reversing a sharp contraction of 11.6% the previous year. This was driven by increased private investment, a rebound in domestic credit to the private sector, stronger merchandise exports, and faster customs clearance for production inputs. Key industries saw significant expansion motor vehicles 73.4%, ready-made garments 61.4%, beverages 58.9%, and textiles 35.3%, with the non-oil sector contributing 1.9 percentage points to the total GDP growth.

Other high-performing sectors included tourism 18%, ICT 10.4%, financial intermediation 11.6%, transportation and storage 9.4%, construction 4.8%, and social services 4.6%. However, Suez Canal revenues fell by 70% due to reduced vessel traffic amid geopolitical instability, and the energy sector saw contractions across oil 7.5%, natural gas 19.6%, and overall extraction activity 9.2%. The government has responded by paying USD 1 billion in overdue arrears and agreeing on a repayment plan with oil companies through June 2025, anticipating recovery through new field investments.

The macroeconomic environment was further stabilized by stringent monetary policies and a floating exchange rate, with inflation declining to 23.2% in January 2025, down from 23.4% in December 2024. The Central Bank of Egypt maintained the discount rate at 27.75%, reflecting cautious optimism in light of easing inflation and improved FX flows.