Russia-Ukraine Ceasefire Ripple Effect: Possible Impacts on Egypt’s Economy
Updated 4/8/2025 8:00:00 AM
Kyiv had agreed to a comprehensive 30-day ceasefire during US-facilitated discussions on March 11th. However, Russia dismissed this proposal unless it included stipulations to restrict Ukraine’s military capabilities, including a halt to foreign military assistance.
As a result, Ukraine, Russia, and the US negotiated a limited ceasefire, focusing on energy infrastructure and the Black Sea. Just two days later, Zelensky condemned Russia for attacking energy facilities in Kherson and urged Washington to take action. This recent agreement between the three countries has significant implications for global economies.
For Egypt, the ceasefire could offer both immediate relief and long-term opportunities. As a major importer of wheat and a key player in global trade through the Suez Canal, Egypt's economy is deeply intertwined with geopolitical stability.
Potential Stabilization of Wheat Markets with a Ceasefire
Wheat is one of Egypt's top agricultural imports, valued at around $4.443 billion in 2024, compared to around $3.802 billion in 2023, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
Before the Russian invasion of Ukraine, which started in February 2022, Russia was Egypt's largest wheat importer. In 2021, 61% of Egypt's wheat imports were from Russia, while 25% came from Ukraine, as per Statista.
Walid Ramadan, an international trade expert, explains: “The conflict disrupted supply chains, leading Egypt to diversify its wheat sources. A ceasefire could stabilize global wheat markets, potentially lowering prices and benefiting Egypt's import costs. However, it is crucial for Egypt to maintain the supply chain resilience developed during the conflict.”
Additionally, Sahar Mohamed Abdel-Haleim, Assistant Professor of Economics at the British University in Egypt (BUE), tells Arab Finance: “Half of the flour used in Egypt’s subsidized bread program, which serves almost 72 million citizens, depends on imports. The Russian-Ukrainian war disrupted wheat trade. With the grain deal set to expire next month, uncertainties remain about the wheat supply.”
“Therefore, a solid ceasefire would promote expectations about the grain supply chain, which stabilizes the commodity market. This could be enhanced by Putin’s attempt to ease sanctions on food producers, exporters, and financial institutions. Moscow also wants to reconnect to the SWIFT payment system, from which it was expelled at the start of the Ukraine war in February 2022,” Abdel-Haleim notes.
Meanwhile, Nourhan Nour Eldin, an economist, tells Arab Finance: “The ceasefire could improve wheat trade, as both Russia and Ukraine are major suppliers. Stability in the Black Sea region would reduce shipping and insurance costs, help restore supply chains, and curb food price inflation. A reduction in regional risks could also prevent sudden increases in global wheat prices, helping Egypt secure its wheat needs at more stable prices.”
Potential Effects of a Ceasefire on Egypt's Economy
In terms of Egypt’s foreign reserves, Ramadan expects that “stabilization in global markets post-ceasefire could influence these reserves, depending on trade balances and foreign investment flows.”
On the other hand, Abdel-Haleim anticipates that “the ceasefire would alleviate many geopolitical risks that have negatively affected Egypt’s economy. This has been reflected in low foreign direct investment (FDI), high business environment uncertainties, a fall in tourism revenue, and a surge in import bill.”
Moreover, Nour Eldin explains, “IF the potential ceasefire materializes, it could be viewed as a ‘positive external shock’ to the Egyptian economy. The war has led to five key challenges: weakening dollar liquidity, reduced domestic private sector investments, higher sovereign borrowing costs, rising external debt, and lower FDI inflows.”
“While no immediate recovery was observed following the ceasefire announcement in March 2025, it is expected that the end of the war will stabilize dollar inflows and improve investor sentiment in the short term. However, investors will remain cautious until structural economic improvements, such as foreign currency availability, are realized,” she adds.
After Russia’s invasion of Ukraine, Egypt stood as an important liquified natural gas (LNG) provider to Europe, especially with disruptions of Russian gas supply to Europe.
In 2022, Egypt's natural gas exports hit a record high of 8 million tons, up from approximately 7 million tons in 2021. The export value of natural gas for the year reached around $8.4 billion, compared to about $3.5 billion in 2021, marking a 140% year-on-year (YoY) increase. This surge was primarily driven by higher global prices for LNG, as reported by the Ministry of Petroleum and Mineral Resources.
Although Egypt’s energy security impacted LNG exports in recent years, the country has sealed different deals that have reinforced its position as a natural gas trading hub. In February 2025, Egypt signed memoranda of understanding (MoUs) with Cyprus to receive natural gas from Cypriot fields, to be processed and liquified in Egypt and subsequently exported to the European market.
In this regard, Ramadan notes, “A ceasefire might lead to the resumption of Russian gas supplies to Europe, potentially lowering global energy prices. This could impact Egypt's LNG export revenues. However, stabilized energy prices may reduce domestic energy costs, benefiting local industries and consumers.”
Meanwhile, Abdel-Haleim points out, “The immediate impact of a ceasefire between Russia and Ukraine would be to ease geopolitical tensions and raise expectations of a potential end to the war and a peace agreement. This, in turn, could boost confidence in stabilizing the commodities and energy markets.”
The limited ceasefire presents a window of opportunity for Egypt's economy to stabilize and grow. The prospect of stabilized global wheat markets offers a much-needed relief from escalating import costs.
The resumption of Russian gas supplies to Europe, while contributing to global energy market stability, could impact Egypt's burgeoning LNG export revenues. Ultimately, Egypt's economic future remains closely tied to the volatile geopolitical landscape.
While the limited ceasefire offers a glimmer of hope for stability in key sectors like wheat, Egypt must continue to prioritize supply chain resilience and adapt its economic strategies to navigate the uncertain path towards a more lasting peace in the region.
By Sarah Samir
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