A general view shows Egypt's Nile river and the the University bridge in the capital Cairo. (AFP)
The report said Egypt, while not directly involved in the war, is among the couries most affected by its spillovers, alongside Jordan and Pakistan, as economic disruptions spread beyond the immediate conflict zone.
The report shoed the World Bank has maintained its projections for the country’s real GDP growth at 4.3 percent in the current FY2025/2026, which ends at end of June 2026 with no forecasts mentioned for the upcoming fiscal year.
Growth in Egypt is expected to remain supported in 2026 by resilient private consumption and improving investment activity, particularly in the first half (h1) of the current fiscal year, the report revealed. However, the pace of disinflation is likely to slow amid rising global commodity and energy prices linked to the war.
As a major oil importer, Egypt faces mounting pressure on its external and fiscal balances due to higher energy import costs, while increased global uncertainty weighs on investor confidence and capital flows. The report also highlighted risks to tourism revenues and remittance inflows, two critical sources of foreign currency for the Egyptian economy.
Tourism, which accounted for around four percent of GDP in 2024, remains particularly vulnerable to regional instability despite showing signs of resilience in late 2025. The sector, a key employer and foreign exchange earner, is highly sensitive to geopolitical developments and travel disruptions.
Remittances, another key pillar of Egypt’s external position, also face risks given the country’s strong economic ties with Gulf economies, which are directly affected by the war.
More broadly, the report warned that oil-importing economies like Egypt are entering the current crisis from a position of pre-existing vulnerabilities, including elevated public debt and limited fiscal space, making it harder to absorb external shocks.
Across the Middle East and North Africa region, the economic impact of the war varies depending on proximity and exposure.
Countries at the epicentre, including Iran, Iraq, Lebanon, and Gulf states, are facing the most severe disruptions, including damage to infrastructure, constrained trade routes, and sharp declines in economic activity.
For countries further afield, including Egypt, the effects are transmitted through multiple channels, notably higher oil and gas prices, reduced tourism inflows, weaker remittances, and declining investor confidence.
The report noted that maritime trade disruptions, particularly around key chokepoints such as the Strait of Hormuz, are adding to global supply pressures, while elevated energy prices are feeding into inflation across the region and beyond.
Growth across oil-importing economies in the region is expected to moderate slightly, from 3.8 percent in 2025 to 3.7 percent in 2026, with Egypt and Pakistan driving much of that performance.
However, downside risks dominate the outlook, as prolonged conflict could further strain fiscal balances, increase borrowing costs, and deepen external imbalances.
Global outlook clouded by rising conflict risks
Globally, the report warned that prolonged or escalating conflict could leave lasting scars on economic growth by damaging human and physical capital, disrupting trade, and entrenching risk perceptions.
Sustained instability in energy markets could also fuel global inflation and weaken economic activity, while heightened uncertainty may prompt shifts in trade patterns and investment flows.
The WBG stressed that the economic cost of conflict rises significantly with its duration and intensity, with long-term consequences that can persist well beyond the end of hostilities.
The report is released ahead of the WBG and IMF 2026 Spring Meetings scheduled for 13-18 April, with the meetings agenda to be announced on Thursday in a press conference in Washington, D.C.
Short link: