Egypt’s economic prospects appear more stable, with inflation easing faster than expected and growth showing signs of recovery. The report cites improving global conditions, a firmer exchange rate, and supportive monetary policies as key factors.
While fiscal reforms and geopolitical uncertainties continue to pose risks, the bank projects inflation to gradually converge toward its target range by late 2026, alongside stronger growth across key sectors of the economy.
Below are the key indicators and projections highlighted in the report on both global and domestic fronts.
Global outlook
Global growth has shown stronger resilience since the start of 2025. Egypt’s main trading partners are expected to operate near their potential this year, with a slight moderation projected for 2026. Global inflation forecasts were revised slightly downward, while the US interest rate is expected to ease gradually, signalling more accommodative global financial conditions.
According to the International Monetary Fund’s (IMF) latest report on the global economy, emerging markets, including Egypt, have demonstrated notable resilience amid global financial volatility in recent years, supported by both favourable external conditions and stronger domestic policy frameworks.
Domestic inflation forecast
Annual headline inflation is expected to continue declining, averaging 14.0 percent in 2025 and 10.5 percent in 2026, compared to 28.3 percent in 2024. Inflation is projected to move closer to the CBE’s target of 7 percent (±2 percentage points) by the fourth quarter of 2026.
In 3Q 2025, both headline and core inflation eased, recording averages of 12.5 and 11.2 percent, respectively — reflecting easing inflationary pressures and the continued dissipation of earlier shocks. The latest figures represent a significant decline of about 14 percentage points compared to the same quarter of the previous year.
Annual food inflation dropped to 2.3 percent in 3Q 2025, marking its lowest level in more than four years (since Q2 2021). Meanwhile, annual non-food inflation remained relatively persistent at 19.8 percent during the same period.
Risks to outlook
The report cautioned that the disinflation path could face pressures from fiscal reforms, including adjustments in energy, tobacco, and electricity prices, as well as from persistent non-food inflation. Global geopolitical tensions could also add inflationary pressures through higher uncertainty and imported costs.
Under a scenario of elevated global risks and financing costs, inflation could average 14.5 percent in 2025 and 11.0 percent in 2026, before easing from mid-2026 as policy measures take effect.
Growth outlook
Egypt’s real GDP growth is projected to rise to 4.8 percent in the current FY2025/2026 (ending June 2026), and 5.1 percent in FY2026/2027. The expected improvement is supported by stronger performance in oil and gas production, manufacturing, and services, alongside a gradual recovery in Suez Canal activity following the recent regional truce.
The IMF recently raised its projection for Egypt’s real GDP growth in FY2025/2026 to 4.5 percent, up from its June estimate of 4.3 percent.
External sector performance
Egypt’s external position strengthened notably in 2Q 2025, driven by a significant narrowing of the current account deficit, which was fully financed by a surplus in the financial account. The overall balance of payments remained broadly stable, reflecting stronger external resilience.
The current account deficit fell to $2.2 billion (0.6 percent of GDP) — a 41 percent improvement compared to 2Q 2024 and the smallest gap since 2Q 2023. The report attributed this improvement mainly to higher remittances from Egyptians abroad and stronger performance in the services sector, particularly tourism and transportation.
Remittances surged by 34 percent year-on-year to $10 billion in 2Q 2025, the highest level on record, reflecting growing confidence in Egypt’s economy and a more stable foreign exchange market. The net services balance recorded a surplus of $4.3 billion, up 40 percent from the previous year, supported by a 19 percent increase in tourism revenues and a 24 percent rise in transport receipts, including a modest recovery in Suez Canal revenues.
On the financing side, the financial account registered a surplus supported by higher non-debt inflows, such as foreign direct investment and short-term supplier credit
Short link: