An Egyptian man arranges fruits at a shop in a market in Cairo,. AP
The EBRD now forecasts real GDP growth of 4.5 percent in 2026 (down 0.2 percentage points from its prior outlook) before a modest rebound to 4.9 percent in 2027, with weaker-than-expected Q1 momentum, currency-driven inflationary pressures, and heightened exposure to the Middle East conflict prompting fiscal and energy-demand adjustments.
Growth outlook
Egypt’s real GDP growth is projected at 4.5 percent in 2026, revised down by 0.2 percentage points from the previous forecast, before edging up to 4.9 percent in 2027 (down 0.1 percent).
On a fiscal-year basis, growth is estimated at 5.3 percent in the current FY2025/2026, easing to 4.9 percent in FY2026/2027.
Growth accelerated from 3.1 percent in 2024 to 5.1 percent in 2025, before moderating in the outlook period.
Near-term momentum
Egypt is among the larger economies where growth in 1Q 2026 came in weaker than expected, alongside Kazakhstan, Romania, Türkiye, and Ukraine.
Regionally, EBRD economies saw momentum slow to 2.9 percent year-on-year in 1Q 2026, down from 3.4 percent in 2025.
Inflation and currency pressures
Inflationary pressures in Egypt have been affected by recent currency depreciation against the US dollar, which contributed to higher domestic price pressures in some economies in the region.
Across the EBRD regions, inflation picked up between February and April 2026, driven mainly by higher energy prices.
Exposure to external shocks
Egypt is listed among economies highly exposed to the economic impact of the Middle East conflict, alongside Jordan, Iraq, Ukraine, Tunisia, and others.
The exposure reflects energy and food import needs, remittance sensitivity, and fiscal constraints.
Policy response and adjustments
Egypt has implemented energy-demand management measures, including:
o limiting commercial and public lighting
o encouraging working from home
o restricting government travel
The report also notes financial-sector adjustments, including higher local currency commission fees and increased cash collateral requirements by banks in response to pressures linked to the shock environment.
Regional context
The southern and eastern Mediterranean region is expected to slow from 3.1 percent in 2025 to 2.5 percent in 2026. The region is expected to recover, rising to 4.2 percent in 2027, with Egypt part of this regional trajectory.
Key takeaway
While Egypt remains one of the stronger performers within the EBRD regions in terms of medium-term growth, the outlook is increasingly shaped by external shocks, tighter financial conditions, inflationary pressures, and policy adjustments aimed at managing energy and macroeconomic stability.
Despite these challenges, the EBRD noted that Egypt remains one of the stronger medium‑term performers in its region, even if the near‑term outlook will depend on external developments, financial‑market conditions, and the effectiveness of domestic policy adjustments.
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