The EBRD's Regional Economic Prospects Report cut Egypt’s real GDP growth in 2025 and 2026 each by 0.2 percent compared to its February projections amid the ramifications of global and regional tensions.
Accordingly, Egypt's real GDP forecasts for 2025 and 2026 are currently at four percent and 4.5 percent, respectively.
Positive performance
“Growth rose to 3.9 percent year-on-year in the first half of FY25 (July-December 2024), compared with 2.4 percent in the same period the preceding year, driven by expansion in manufacturing, transportation and wholesale and retail trade," the report explained.
It added that the country's manufacturing sector began to bounce back following a notable contraction during the foreign exchange shortages before March 2024.
Egypt experienced a significant foreign exchange (FX) shortage for over two years in response to the repercussions of the Russian-Ukrainian war, which began in March 2022.
The monetary policy tightening cycle has started, raising investors' appetite to benefit from the high interest rates.
The report indicated that output in Egypt's oil and gas sector continued to decline, pointing out that this contraction represents a key issue for government policy in FY2024/2025 and FY2025/2026.
In this respect, the report highlighted that resolving arrears to international energy companies is one of the main issues the Egyptian government needs to tackle.
Furthermore, the report projected Egypt’s inflation rate to maintain its downward path, following its decline to 12.8 percent in February 2025.
This marks its lowest level since March 2022, in response to the Central Bank of Egypt's (CBE) tight monetary policy stance, which has been applied since March 2022.
“Rising fuel prices, as part of the government’s commitment to reach cost recovery by the end of the year under the International Monetary Fund (IMF)-supported programme, may put upwards pressure on consumer prices," the report expected.
It is worth noting that an IMF mission is currently visiting Egypt for the discussions of the fifth review of the current Extended Fund Facility (EFF) loan programme, which is expected to be completed before the end of June.
The EBRD report also discussed Egypt’s net international reserve (NIR), which rose to $47.4 billion in February 2025, its highest level in over 20 years. The report expected it to remain stable.
Egypt’s NIR continued its recovery in April, hitting an all-time high of $48.1 billion, according to the most recent data published by the CBE.
“The growth outlook depends on the implementation of structural reforms, particularly related to the state’s presence in the economy, and the continued reduction of debt levels and associated service costs. Risks to the outlook are relatively high given international trade policy uncertainty and Egypt’s continued reliance on portfolio investment from abroad as a source of external financing," the report clarified.
Economic growth & forecasts in EBRD regions (2022–2026)
According to the report, growth in the EBRD regions slowed from 3.4 percent in 2022 to 2.8 percent in both 2023 and 2024.
The 2024 outcome aligned with earlier forecasts but masked regional variation — stronger-than-expected growth in Türkiye, Central Asia, and the Caucasus contrasted with weaker results in most EU-EBRD countries due to sluggish advanced European economies.
Outlook for 2025-2026
The report expected its regions’ growth to rise slightly to three percent in 2025. However, this is a downward revision due to rising global economic and trade policy uncertainty, weaker external demand, and new US import tariffs.
Growth is expected to recover to 3.4 percent in 2026.
Key risks include geopolitical tensions, notably the wars in Ukraine and Gaza, and instability in the Middle East.
Impact of US tariffs
According to the report, the new US tariffs introduced in 2025, mainly the 25 percent on steel, aluminium, and cars and a general 10 percent increase, are expected to raise the average effective US tariff on EBRD imports from 1.8 percent to 10.5 percent.
The Slovak Republic, Jordan, and Hungary are the most affected economies, particularly due to car tariffs.
Indirect effects through global supply chains may extend to economies with minimal direct US trade.
Inflation trends
The report data showed that the inflation rate in the EBRD’s regions peaked at 17.5 percent in October 2022, fell to 5.3 percent by September 2024, but rose again to 6.1 percent by February 2025.
The rise in inflation is increasingly driven by strong demand, loose fiscal policy, and high nominal wage growth.
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