Egypt.. The IMF raises economic growth expectations.. and experts comment

Cairo, Egypt - The International Monetary Fund raised its forecasts for the growth of the Egyptian economy during the current fiscal year, in light of the improved performance of the economy and the recovery of some sources of revenue, while regional tensions still represent a challenge to growth prospects, amid expectations of a rise in the inflation rate again. The new forecasts come at a time when Egypt seeks to attract more investments and enhance activity in various economic sectors, in conjunction with continuing external pressures that may affect trade movement and energy prices.

According to the World Economic Outlook report issued by the Monetary Fund, Egypt’s GDP growth expectation rose to 5.1% during the fiscal year 2025-2026, compared to 4.4% in the previous fiscal year, while the Fund expects growth to record 4.7% during the fiscal year 2026-2027. Deputy Director of the Fund's Research Department, Petya Cueva Brooks, said that raising expectations is linked to the recovery of Suez Canal and oil revenues. “Factors that may support growth” Economist Khaled Al-Shafi’i stated that increasing investments in various economic activities, in addition to the expansion of the number of companies and the localization of new industries, are among the factors that can support growth, through increasing production capacities and transferring technology and knowledge.

Al-Shafi’i added, in exclusive statements to Ofek News in Arabic, that Egypt’s moves to enhance economic cooperation with China, Russia, and other Asian countries, in addition to expanding investment partnerships, may contribute to attracting new investments, especially in light of the political and geopolitical turmoil that drives investors to search for more stable markets. He explained that increasing investments in the sectors of tourism, construction, industry and agriculture could support economic activity, noting that Egypt's location as a gateway to the African continent represents one of the factors supporting opportunities to attract investors.

Regarding inflation, Al-Shafi’i said that expectations of the rate rising to 14.8% remain linked to factors that may change during the coming period, including possible increases in fuel and electricity prices, indicating that monetary policies taken by the Central Bank could contribute to reducing inflationary pressures. He added that the rise in inflation may negatively affect citizens and the prices of goods and products, but he pointed out that the expected rate is still lower than the levels recorded previously. “Shock absorption” For his part, economic expert Mohamed Badra said that the relative stability in Egypt and its ability to absorb economic shocks, whether related to the exchange market or external developments, represent two factors supporting the performance of the economy, adding that Egypt’s maintenance of a high level of foreign reserves contributed to strengthening its ability to deal with economic variables, pointing out that the performance of the economy was better than some expectations that indicated greater pressures.

Badra warned, in exclusive statements to Ofek News in Arabic, that the continuation of regional tensions may pose challenges to growth, most notably the developments in the Bab al-Mandab region, due to the effects they may have on shipping traffic, noting that these challenges are linked to external geopolitical factors, the effects of which on the Egyptian economy have remained largely limited until now. Regarding inflation, Badra considered that fuel prices represent the most important factor in determining its direction during the coming period, as their increase may lead to an increase in the costs of goods and products, which will be reflected in the prices borne by consumers.

Data from the Central Agency for Public Mobilization and Statistics indicate that the annual inflation rate in cities declined to 13.9% in September 2026, compared to 14.5% in August, while the core inflation rate decreased, according to the Central Bank, to 14.1% compared to 14.9% during the same period. He added that current inflation levels are still high, but pointed to the government's ability to contain the pressures associated with fuel prices and maintain them at levels close to existing levels, which may limit their impact on prices.

At the global level, the International Monetary Fund expected growth to slow to 3.1% in 2026, before rising to 3.4% in 2027. It also expected economic activity in the Middle East and Central Asia to contract by 0.3% during 2026, before recovering in the following year, in light of continuing regional tensions and the assumption that the Strait of Hormuz will remain closed for a longer period.