World Bank revises Egypt’s economic forecast, expects modest recovery in coming 2 years

Cairo – June 11, 2025: Egypt is expected to see a gradual economic rebound over the next two fiscal years, with real GDP growth projected to reach 4.2 percent in FY2025/2026 and 4.6 percent in FY2026/2027, according to the World Bank’s Global Economic Prospects report.

The anticipated acceleration in growth is attributed to a combination of factors, including rising private consumption and a boost in private sector investment—partly linked to a major investment agreement with the United Arab Emirates.

Looser monetary policy and a slow but steady recovery in the manufacturing sector are also expected to play a key role in supporting the economic upswing.

The country’s current account deficit is forecast to narrow in FY2025/2026, aided by lower global oil and gas prices, solid remittance inflows, and continued growth in tourism. Additionally, the non-oil trade deficit is likely to decline as the impact of import backlog clearance from FY2024/2025 fades.

Annually, Egypt’s pace of recovery remains slower compared to several of its regional peers. The World Bank significantly cut its outlook for Egypt’s economic performance in 2024, forecasting GDP growth of just 2.4 percent—a steep drop from the 3.8 percent recorded in 2023.

Saudi Arabia is projected to grow by 3.4 percent in 2025, up from just 1.1 percent in 2024, while the broader Middle East and North Africa (MENA) region is also expected to expand by 3.4 percent next year, doubling its 1.8 percent growth forecast for 2024.

The World Bank attributes Egypt’s slower rebound to ongoing macroeconomic challenges. These include high inflation, a weakening currency, and persistent delays in implementing structural reforms.

While Egypt’s relatively modest recovery stands in contrast to these more robust regional trends, the World Bank expects the economy to revive in 2025 back to 3.8 percent, with a forecast of 4.2 percent for 2026. The report notes that stabilization measures and rising investment activity could help sustain the expected economic improvement in 2025 and 2026.

On the global front, the economic outlook remains subdued. Global growth is forecast to slow to 2.3 percent in 2025, nearly half a percentage point below earlier projections. If current trends persist, the average global growth rate in the first seven years of the 2020s will mark the weakest start to any decade since the 1960s.

Developing economies are expected to grow at an average of 3.8 percent in 2025, rising slightly to 3.9 percent in 2026 and 2027—well below the pace seen during the 2010s. Low-income countries are also facing downward pressure, with the World Bank lowering its 2025 forecast to 5.3 percent, a 0.4-point drop from earlier estimates.

Inflationary pressures continue to weigh on the global economy, with average inflation expected to remain elevated at 2.9 percent in 2025. Rising tariffs and tight labor markets are among the key drivers.

However, the World Bank also highlighted a potential upside scenario: if major economies manage to ease trade tensions and reduce tariff levels by half, global growth could receive a 0.2 percentage point boost in both 2025 and 2026.

To strengthen economic performance, the Bank advises governments to prioritize policies that improve the business environment, enhance labor productivity, and support job creation through better skills training and workforce-firm alignment. It also stressed the importance of international cooperation and financial support for countries facing conflict and economic distress.

Complementing the World Bank’s view, Fitch Solutions’ research unit BMI in late May revised its outlook for Egypt’s FY2025/2026 growth slightly downward to 4.7 percent, from an earlier 5.0 percent. The revision stems from rising global trade uncertainty, particularly new U.S. tariffs that have dampened global demand and increased investor risk aversion. Despite the downgrade, BMI’s projection still represents a solid pickup from its estimate of 3.9 percent growth in FY2024/2025.

Meanwhile, the International Monetary Fund (IMF) raised its own forecast for FY2024/2025 to 3.8 percent following a recent review under Egypt’s Extended Fund Facility. The upgrade reflects stronger-than-anticipated performance in the first half of the fiscal year.

The Central Bank of Egypt (CBE) also provided a more optimistic assessment, projecting GDP growth at 4.3 percent for FY2024/2025, up from just 2.4 percent in FY2023/2024. The CBE expects continued progress in fiscal and structural reform efforts to support economic activity going forward.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}