Fitch Solutions’ BMI expects Egypt’s household spending growth to slow in 2025
Updated 1/28/2025 8:34:00 AM
Arab Finance: Egypt's real household spending is expected to grow by 3.1% year-on-year (YoY) to EGP 2.1 trillion in 2025, lower than 7.5% for 2024, according to Egypt 2025 Consumer Outlook article by BMI, a Fitch Solutions company.
The 4.4 percentage point drop is due to the declining effect of about 50% YoY spending increase on subsidies and social safety nets in the current fiscal year’s (FY) budget, which became effective in July and elevated consumer spending.
BMI projected that household spending growth will stabilize in the medium term, climbing by 4.4% YoY to EGP 2.4 trillion by 2028. This is forecast to be followed by an annual average of 18.5% YoY to reach EGP 20.8 trillion by the end of 2028.
The research unit also expected spending on food and beverages (F&B) to surge in 2025 due to inflation in price.
Moreover, spending on the sector is projected to hike by 22.3% YoY to EGP 5.2 trillion in 2025, up from a growth rate of 8.2% in 2022, according to BMI. This will represent the bulk of consumer spending this year.
Fitch is optimistic for the future of Egypt’s retail sector, stating that “if Egypt's economy can navigate the current crisis, its middle class has the potential to become the fastest growing in the world, bearing in mind the size of the market's population.”
“This growth in household incomes will attract new players to the retail market, which will help to consolidate and modernize the industry,” Fitch added.
BMI warned that geopolitical risks threaten the retail sector, as they could “result in a slowdown in investment activity, a reduction, a reduction in travel and tourism, and a further depreciation of the EGP.”
The report also highlighted that the anticipated subsidies’ cut will increase inflationary pressure, squeezing household budgets and limiting spending on non-essential items.
“Inflation and the depreciated EGP have stunted income growth and will hinder the population moving up the income brackets. This will delay growth of the affluent middle class,” it added.
Related News
