Economic Outline

Economic Indicators

Egypt is classified as a lower middle-income country by the World Bank and has considerable potential to capitalize on its established manufacturing and services sectors, a large domestic market, and its strategic location as a gateway to Africa, Asia, and Europe. Growth is expected to gradually recover from an estimated 2.5% in FY24 (July 2023-June 2024) to 3.5% in FY25 and 4.2% in FY26, driven by favourable base effects and investment, particularly from the UAE deal related to the Ras El Hekma development (data World Bank). In 2024, lower gas and oil exports, along with a decline in Suez Canal revenues due to the Middle East conflict, significantly impacted economic activity.

Concerning public finances, Egypt implemented an economic reform program comprising fiscal consolidation measures, the introduction of a floating exchange rate and large cuts in subsidies. The budget deficit is expected to increase from 3.6% of GDP in FY24 to 7.0% in FY25, primarily due to higher interest payments and the fading impact of the one-off Ras Elhekma deal, before declining with fiscal consolidation (World Bank). External financing needs remain significant, driven by maturing debt and arrears to International Oil Companies. Additionally, the widening current account deficit could pressure foreign currency reserves, particularly if the Middle East conflict persists. The debt-to-GDP ratio was estimated at 90.9% by the IMF, with a downward trend expected over the forecast horizon (to 79.1% by 2026). The share in the hands of external lenders only accounts for around one-third of GDP. According to the OECD, consumer price inflation reached 26.3% year-on-year in October, continuing to suppress domestic demand. While food prices slowed, disinflation has stalled since summer due to increased energy and public transport prices, linked to cuts in budget subsidies for these sectors. The organization also invited Egyptian authorities to continue fighting inflation by keeping monetary policy tight and restraining public investment projects that are not urgently needed.

The unemployment rate stood at 7.2% in 2024, according to the IMF estimates, with female unemployment being around four times higher than for males. The economic recovery is expected to lead to a further decline in unemployment, with the rate projected to drop to 6.9% by 2026. However, it is estimated that three-quarters of all employees are paid as unofficial workers, 29.7% of the population lives below the poverty line and 4.5% live in extreme poverty, a ratio that has been decreasing in recent years (CAPMAS – latest data available). Finally, GDP per capita (PPP) was estimated at USD 20,799 in 2024 by the IMF.

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