Arab Finance: Fitch Solutions’ research arm BMI has revised Egypt’s gross domestic product (GDP) growth forecast for fiscal year (FY) 2025/2026 at 5%, up from 4.7% previously projected in August, according to Enterprise News, citing Ramona Moubarak, Head of MENA Country Risk at Fitch Solutions.
Speaking during a webinar, Moubarak said the upward revision reflects a recovery in investment activity and a smaller drag in net exports.
She noted that easing inflation and lower interest rates will help boost private sector investments, particularly in manufacturing, while a competitive Egyptian pound is expected to attract new foreign direct investment (FDI) inflows and sustain export growth.
The Central Bank of Egypt (CBE) has cut interest rates by a total of 625 basis points since beginning its easing cycle in April, including a 100-basis-point reduction earlier this month.
The continued rate cuts were driven by declining inflation, which recently fell to its lowest level in years.
BMI now expects inflation to average 14% this year, down 0.4 percentage points from its previous forecast in August.
Moubarak added that although the recent fuel price hike will cause a temporary rise in inflation readings, the overall trend will remain downward.
For next year, BMI raised its inflation forecast slightly to 10.5% from 10%.
Egypt increased fuel prices for the second time this year earlier this month as part of efforts to phase out energy subsidies and align domestic prices with international market levels.
On monetary policy, BMI expects the CBE to cut interest rates by another 100 basis points in December, bringing the lending rate to around 21%.
Moubarak said the outlook is underpinned by sharply lower inflation, a stronger currency, and a global shift toward looser monetary policy.
However, the CBE may act cautiously to preserve Egypt’s carry trade appeal, as foreign investors continue to seek high returns, Moubarak noted.
