CAIRO (Reuters) -Egypt’s economy likely grew 4.0% in the fiscal year that ended in June, a slight upward revision from the 3.8% forecast in April, a Reuters poll showed, as reforms tied to IMF financing and stronger manufacturing activity support a gradual recovery.
Growth in gross domestic product was projected to accelerate to 4.6% this fiscal year, according to the median estimate of 13 economists surveyed July 15-28.
The Arab world’s most populous country has been struggling with the aftermath of a sharp currency devaluation, soaring inflation and the economic fallout from the war in Gaza.
Growth slumped to 2.4% in 2023/24 but the government has since accelerated economic reforms under an $8 billion programme with the International Monetary Fund and secured $24 billion in investment from the United Arab Emirates’ sovereign wealth fund, including a major land deal on the Mediterranean coast.
Inflation, which peaked at a record 38% in September 2023, has begun to ease but remains high. Egypt’s annual urban consumer price inflation slowed to 14.9% in June from 16.8% in May.
Economists expect average headline inflation to moderate to 12.5% in 2025/26, 9.5% in 2026/27, and 7.3% in 2027/28 – still above the central bank’s target of between 5% and 9% on average by Q4 2026.
Under its IMF-backed reform agenda, Egypt has pledged to phase out energy subsidies, particularly on fuel – although this could keep inflationary pressures elevated in the near term.
The Egyptian pound, which was floated in March 2024 after being fixed at around 30.85 to the dollar for over a year, is expected to weaken further. The currency is projected to fall to 51.1 per dollar by the end of June 2026 and 52.9 by June 2027. It currently trades at around 48.6 on the interbank market.
Interest rates are also expected to ease gradually, the poll found. The Central Bank of Egypt’s overnight lending rate, now at 25.0%, is forecast to decline to 17.5% by end-2025/26 and to 13.0% the following year.
The central bank cut its benchmark rate by a cumulative 325 basis points in April and May, citing slowing inflation and improved foreign exchange liquidity.
However, in July, policymakers signalled a more cautious stance as oil price volatility, driven by supply-side risks and global demand uncertainty, prompted a “wait-and-see” approach to the monetary easing cycle.
(Other stories from the Reuters global economic poll)
(Polling by Anant Chandak; writing by Mohamed Ezz; editing by Mark Heinrich)
