These projections are compared to the expectations the IMF announced in October.

Egypt is engaged in a $8 billion Extended Fund Facility (EFF) programme that finances the country’s second wave of structural and economic reforms. The fourth review of the programme is pending the approval of the IMF’s Board of Directors, which is expected to be announced in January.

The IMF also cut its expectations for the Middle East and North Africa (MENA) region by 0.5 percent and 0.3 percent for 2025 and 2026 to 3.5 percent and 3.9 percent, respectively. Nevertheless, the report expected the growth in the Middle East and Central Asia to improve.

The report attributed that to a 1.3 percent downward revision for Saudi Arabia’s 2025 growth, influenced mainly by the extension of OPEC+ production cuts.

Overall growth in Latin America and the Caribbean is projected to increase slightly to 2.5 percent in 2025 despite anticipated slowdowns in the region’s largest economies.

Meanwhile, growth in sub-Saharan Africa is expected to rise in 2025, while emerging and developing Europe is forecasted to experience a slowdown.

According to the report, growth in emerging markets and developing economies in 2025 and 2026 is anticipated to align closely with the performance seen in 2024.

In this respect, the report explained that, compared to the projections made in October, China’s growth forecast for 2025 has been slightly raised by 0.1 percent to 4.6 percent.

This forecast was based on carryover effects from 2024 and the fiscal package announced in November, which largely mitigates the negative impact on investment stemming from increased trade policy uncertainty and challenges in the property market.

In 2026, growth is expected to stabilize at 4.5 percent, as the effects of trade policy uncertainty wane and an increase in the retirement age helps slow the decline in the labour supply.

India is projected to maintain solid growth at 6.5 percent for 2025 and 2026, consistent with earlier estimates and in line with its potential.

Global outlook
 

Globally, the report projected the world economic outlook to remain stable at 3.3 percent in 2025 and 2026. Yet, the report pointed out that these projections are below the historical (2000–2019) average of 3.7 percent.

“The overall picture, however, hides divergent paths across economies and a precarious global growth profile,” read the report.

The report also revised down estimates for the trade volume in 2025 and 2026, mainly driven by increasing trade policy uncertainty that will likely disproportionately affect investment among trade-intensive firms.

“Nevertheless, the baseline scenario suggests that the impact of this heightened uncertainty is expected to be temporary. Additionally, the anticipation of tighter trade restrictions has led to the front-loading of some trade flows, providing a near-term offset,” the report highlighted.

Progress in disinflation globally is anticipated to persist, with only minor deviations from the October WEO forecasts.

The report attributed that to the gradual easing of labour markets, which is expected to alleviate demand pressures. Alongside a predicted drop in energy prices, headline inflation will continue declining towards central bank targets.

The report expected inflation in the United States to remain near but slightly above the two percent target in 2025.

In contrast, inflationary trends are anticipated to be more subdued in the euro area, while low inflation is projected to continue in China. As a result, the disparity between expected policy rates in the United States and those in other countries is likely to widen.

Egypt forecast
 

The IMF's decision to revise Egypt’s real GDP projections came due to uncertainty around the foreign exchange (FX) situation, Deniz Igan, the Division Chief in the Research Department at the IMF, told Ahram Online at the hybrid press conference the Fund held on Friday to launch the WEO update.

“That said, we do expect there's recovery to take hold. As I said, forecast in 2026 is 4.1 although effects has been worse than what we had told in October, we do continue to see recovery, continuing in the in the Egyptian economy. And as FX market conditions improve and investors' tenement improves. And this would correspond to pick up in mining and manufacturing related activities, and economic recovery coverage should continue," Igan explained.