The IMF also expects the country’s GDP growth to rebound to 4.4 percent in 2025, according to the World Economic Outlook report released on Tuesday.

As per the report, Egypt’s inflation is projected to reach its peak of 32.5 percent in 2024, before shrinking to 25.7 percent in 2025.

In April following the completion of the first and second reviews under the IMF’s ongoing extended $8 billion loan deal for Egypt, the IMF expected the county’s inflation rate to average 25.5 percent in the upcoming FY2024/2025 and decrease to 15.2 percent by the end of the same fiscal year.

The IMF attributed its projections to the tightening of the monetary policy and the appreciation trend of the local currency.

The IMF extended its loan deal with Egypt from $3 billion to $8 billion in March in response to the harsh impacts of the tensions in the Middle East on the country’s economy. 

The third review of the programme is scheduled to be completed by the end of June, while the remainder five reviews until 2026 are to be completed every six months, with each enabling Egypt to access an amount of $1.3 billion.

Meanwhile, the report expects the country’s current account balance to jump to 6.3 percent in 2024, up from 1.2 percent posted in 2023, and to significantly decline to 2.4 percent in 2024. 

The current account balance is the sum of net exports of goods and services, net primary income, and net secondary income.

This projection places Egypt third among the oil importer countries in the Middle East and Central Asia region.

For unemployment, the report expects its rates to decline to 7.1 percent in 2024 and to seven percent in 2025, down from 7.2 percent registered in 2023. As per the readings, Egypt is expected to have the second-lowest unemployment rate until 2025.

On a regional level, the report projects the real GDP growth of the Middle East and North Africa at 2.7 percent and 4.2 percent in 2024 and 2025, respectively, compared to 1.9 percent in 2023.

For the region’s inflation rate, the report expects it to gradually decline to 15.4 in 2024 and 12.4 percent in 2025, down from 16 percent posted in 2023.

Globally, the report revised up the world’s real GDP growth from 3.2 percent in 2023 to 3.3 percent in 2024. 

“The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russia’s invasion of Ukraine; weak productivity growth; and increasing geoeconomic fragmentation”, the report explains.

The report expects global headline inflation to drop from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025. In this respect, the report highlights that the advanced economies are returning to their inflation targets sooner than emerging markets and developing economies.

Moreover, the report noted that its latest forecast for global growth five years from now––at 3.1 percent––is at its lowest in decades.

“The pace of convergence toward higher living standards for middle- and lower-income countries has slowed, implying a persistence in global economic disparities. The relatively weak medium-term outlook reflects lower growth in GDP per person stemming, notably, from persistent structural frictions preventing capital and labour from moving to productive firms”, the report noted.

Concerning global inflation, the report said that headline inflation neared its pre-pandemic level in the majority of economies in late 2023 for the first time since the start of the global inflation surge, averaging 2.3 percent on a quarter-over-quarter annualized basis, down from a peak of 9.5 percent in the second quarter of 2022.

“For emerging market and developing economies, inflation was 9.9 percent in the last quarter of 2023, down from a peak of 13.7 percent in the first quarter of 2022, but this average was driven by high inflation in a few countries; for the median emerging market and developing economy, inflation declined to 3.9 percent. This progress notwithstanding, inflation is not yet at target in most economies”, the report explains.

The report projects global headline inflation to shrink from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025.

World trade growth is projected at three percent in 2024 and 3.3 percent in 2025, with revisions of a 0.3 percent decrease for 2024 and 2025 compared with the IMF’s January 2024 projections.

In this regard, the report explains that world Trade growth is expected to remain below its historical annual average growth rate of 4.9 percent in the medium term from 2000 to 2019, reaching 3.2 percent in 2029.

“This projection implies, in the context of the relatively low outlook for economic growth, a ratio of total world trade to GDP (in current dollars) that averages 57 percent over the next five years, broadly in line with the evolution in trade since the global financial crisis”, according to the report.

The report was launched today on the sidelines of the annual meetings (Spring Meetings) that are being coorginised by the World Bank Group (WBG) and the IMF. 

This month, the Fund’s Executive Board IMF selected the current Kristalina Georgieva to serve as IMF Managing Director for a second five-year term starting on 1st October 2024