Experts expect Egypt’s growth to slow and inflation to rise economy

Analysts lowered their expectations for economic growth in Egypt, in a poll conducted by Reuters for this year and next, after the war on Iran led to higher energy prices, an increase in the cost of transportation and industrial production, and a rise in the level of inflation.

The average estimates of 12 economists for the period from April 8 to April 23 indicated that Egypt’s GDP growth will reach 4.6% in the year ending next June, and also 4.6% in the following fiscal year 2026-2027.

In a survey conducted in January, that is, before the outbreak of war, experts expected a growth of 4.9% for the Egyptian economy, noting that the reforms implemented within the framework of the International Monetary Fund program two years ago had begun to bear fruit.

Impact of energy prices

Pascal Defoe, an economist at the French bank BNP Paribas, said: We expect energy prices to remain high in the coming period, even if oil flows through the Strait of Hormuz return to normal. This will lead to increased inflationary pressures in Egypt.”

Defoe added, “In this context, we expect a slowdown in activity in Egypt, but not a sharp decline.”

Growth in Egypt declined to 2.4% in the period 2023-2024, but it improved relatively after March 2024, when Egypt sharply devalued its currency, the pound, and raised interest rates, as part of an economic reform program to obtain loans and credit guarantees from the IMF worth $8 billion.

This month, the Central Bank of Egypt revised down its forecast for economic growth on an annual basis for the fiscal year 2025-2026 to 4.9%, compared to the 5.1% it expected last February. The Central Bank of Egypt attributed this modification to the effects of the Iran war.

Losses in vital sectors

In addition to rising energy prices, the war may also harm tourism in Egypt, and slow the flow of remittances from Egyptians working in Gulf countries.

Egyptian President Abdel Fattah El-Sisi said in a speech he delivered yesterday on the anniversary of the liberation of Sinai that the country suffered losses estimated at about $10 billion as a result of the decline in revenues from the Suez Canal with the decline in ship traffic through it.

The survey expected inflation to reach 13.5% on average in 2025-2026, and 12% in 2026-2027. In the previous poll, economists had expected inflation of 11.6% and 9.1%, respectively.

Economic analyst Harry Chambers of Capital Economics told Reuters, “Inflation is already high, and if the conflict in the Middle East continues and oil prices remain high, this will lead to a continued increase in inflation.”

The Central Agency for Public Mobilization and Statistics reported that the annual inflation rate in Egyptian cities increased at a greater pace than expected, to 15.2% last March, compared to 13.4% last February.

The central bank reduced the main interest rate 5 times in 2025, and then again last February, with a cumulative decrease of 825 basis points.

Analysts expect the value of the pound to decline slightly to 51.58 to the dollar by the end of June 2026, compared to its current price of approximately 51.06 pounds, after the exchange rate of the dollar against the pound rose following the outbreak of the war on Iran at the end of last February.

Measures to confront the crisis

At the end of last March, Egyptian Prime Minister Mostafa Madbouly announced a set of measures to rationalize energy consumption in Egypt, as a result of the high oil and gas import bill with the outbreak of war in the Middle East.

Procedures included the following:

• Shops, restaurants, shopping malls, cinemas, theaters, and wedding halls close at nine in the evening, except for Thursdays and Fridays, holidays, and official occasions, when they close at ten in the evening local time (8 p.m. GMT).
• Reducing street lighting and reducing street lighting by 50%.
• Reducing fuel allocations for government vehicles by 30%.
• The government district in the New Administrative Capital will be closed at 6 p.m. (4 p.m. GMT).
• Completely slowing down national projects that consume diesel for two months.
• Implementing remote work on Sunday of every week, starting from the first of April.