EBRD lowers Egypt's 2025 GDP growth forecast
Updated 3/2/2025 8:11:00 AM
Arab Finance: The European Bank for Reconstruction and Development (EBRD) has cut Egypt’s gross domestic product (GDP) growth forecast for 2025 to 4.2%, 0.3% down from its September estimates, according to EBRD’s latest Regional Economic Prospects report.
The bank also expected Egypt’s GDP to grow to 4.7% in 2026, the report showed.
Moreover, it slashed the country’s GDP forecast for fiscal year (FY) 2024/2025 to 3.6%, 0.4% down from its previous estimate.
However, the lender upgraded Egypt’s economic growth forecast for FY 2025/2026 to 4.6%.
The EBRD highlighted that business and consumer confidence in Egypt is expected to recover, backed by dwindling inflation.
“Delays in implementing structural reforms are a source of risk to the outlook,” the report said.
The report also underlined that growth in FY 2024/2025 is expected to be driven by the sectors of financing services, communications, accommodation and food, transportation, and storage, excluding the Suez Canal.
The manufacturing sector also began recovering following a recession in the previous year, with the extractive sectors recording the sharpest contractions.
Despite required future adjustments to fuel prices, prices will likely continue to drop due base effects and tight monetary policy.
In December 2024, reserves grew to $47.3 billion, backed by a surge in remittances and tourism receipts, which offset a nearly 60% drop in Suez Canal revenues in 2024.
Debt-to-GDP is expected to retreat to 85% in FY 2024/2025 from 96% in FY2023/2024, though debt servicing costs remain burdensome and are expected to amount to 50-60% of government spending in FY 2024/2025.
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