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| Optimistic Forecasts for Egypt's Economy |
The World Bank's Optimistic Forecasts for Egypt's Economy in 2025
The World Bank maintained its forecast for Egypt's economic growth at 3.8% for the current fiscal year, reflecting a stabilization of its projections compared to the previous estimates announced in April, according to the bank's latest World Economic Outlook report.
Egypt appears to have navigated the uncertainty surrounding tariffs much better than some feared, and much better than some of its regional peers, according to the report. The growth forecast for the current year is 0.3 percentage points higher than the bank's January forecast, before the trade war erupted, while its forecast for the new fiscal year remains unchanged. The World Bank's forecast is less optimistic than government estimates, which predict GDP growth of 4% in fiscal year 2025/24, 4.5% in fiscal year 2025/26, and 5.0% in fiscal year 2026/27.
The report attributes the successive increases in growth over the three years to "strong private consumption, increased private investment—driven by the implementation of the investment agreement with the United Arab Emirates and the expected monetary easing—and a gradual recovery in industrial activity." The report also cited macroeconomic stability, easing political tensions, and a recovery in the tourism sector as reasons for its expectation of continued acceleration in growth.
The World Bank also forecasts that Egypt's current account deficit will narrow in fiscal year 2025/26, driven by a combination of lower oil and natural gas prices, higher remittances, and a growing tourism sector. The bank also forecasts that the country's non-oil trade deficit will narrow as "the effects of the settlement of the cumulative import crisis from fiscal year 2024/25 fade."
However, despite the optimistic picture, fiscal deficits in oil-importing countries, including Egypt, are expected to widen in 2025, which the bank attributes in part to "higher interest payments in Egypt and lower non-tax revenues" following a significant one-time increase from the Ras al-Khaimah agreement with the UAE.
However, deficits are expected to decline slightly in 2026, as Egypt's fiscal consolidation continues in FY 2025/26, including through further reductions in energy subsidies and enhanced tax revenue mobilization efforts. High inflation is also expected to keep poverty levels "high."
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