Azour made discussed the impact of the US-Iran war on Egypt’s economic outlook, as two reviews remain under the outstanding Extended Fund Facility (EFF) loan programme.
Countries across the Middle East and North Africa (MENA) are facing uneven fallout from the conflict, with the scale of the impact varying widely depending on energy exposure, trade links, and financial conditions, Azour said.
The crisis has created an “asymmetric shock” across the region, Azour stated, challenging the traditional distinction between oil exporters and importers.
“There is no single MENA story today,” he noted, explaining that oil-exporting countries are primarily affected through disruptions to export capacity, infrastructure damage, and market access, while oil importers are grappling with rising prices, pressures on tourism and trade, and tighter access to international financial markets.
Egypt’s response and outlook
On Egypt, Azour said authorities acted swiftly to contain external pressures, deploying a mix of policy tools that helped stabilize markets.
“Egypt has been responding rapidly by using exchange rate policy as a buffer,” he said, noting that sovereign spreads widened initially but have since largely returned to pre-shock levels.
He added that economic growth will be affected, but “the impact so far appears limited,” pointing to a policy mix combining fiscal measures to mitigate pressures without broad expansionary spending, alongside continued monetary tightening to curb inflation.
Inflation risks and central bank challenges
Azour warned that energy disruptions remain a key inflation risk across the region, placing pressure on central banks to respond effectively.
“The big challenge for all central banks is preventing temporary shocks from turning into persistent inflation,” he said.
Policy responses will differ depending on country conditions, he added. Economies with high inflation may need to raise interest rates, while those with flexible exchange rates should allow currencies to adjust. Countries with fixed exchange rate regimes must rely on interest rates and reserve management to maintain stability.
Clear communication with markets and the financial sector remains essential to preserving confidence, he said.
Broader regional and global spillovers
Panellists said the conflict has expanded beyond energy markets, affecting multiple sectors and regions.
Energy infrastructure disruptions have temporarily halted significant volumes of oil and gas supply, while tourism in parts of the Gulf has weakened compared with last year. Financial markets have also seen volatility, including currency depreciation in several countries, with Egypt among the most affected.
Under a baseline scenario in which hostilities ease by mid-year, oil prices are expected to remain elevated, potentially averaging about $10 per barrel higher than previous forecasts. In a more severe scenario, prices could rise to around $130 per barrel for a prolonged period.
Such an outcome would widen current account deficits in oil-importing economies such as Tunisia and Jordan and deepen macroeconomic pressures across the region.
The panel also featured Chief Economist and Head of Research for Africa and the Middle East at Standard Chartered Razia Khan, Head of Global Commodities Research at JP Morgan Natasha Kaneva, and President of Nasser Saidi Associates Nasser Saidi, who discussed the broader structural and financial implications of the crisis.
IMF outlook
The IMF last week projected Egypt’s real GDP growth at 4.7 percent for the 2025–2026 fiscal year, rising to 5.4 percent in 2026–2027.
Egypt’s $8 billion EFF programme is scheduled to conclude on 15 December.
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