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  • Thursday, 15 May 2025

During the Annual Meetings of the Bank Held in the United Kingdom The European Bank for Reconstruction and Development (EBRD) Released Regional Economic Prospects Report and Expects Continued Positive Growth for the Egyptian Economy, Supported by Strong Non-Oil Sector Activity and Structural Reforms

• EBRD expects Egypt's economy to grow to 3.8% by the end of June and 4.4% in FY 2025/2026.

• Al-Mashat: Positive economic growth forecasts reflect the effectiveness of the economic and structural reform measures implemented by the state.

• Encouraging industry and exports and improving the business environment are top priorities to achieve sustainable economic growth led by the private sector.

In continuation of the positive forecasts for the Egyptian economy in reports issued by international institutions, the European Bank for Reconstruction and Development (EBRD) released a report on “Regional Economic Prospects,” coinciding with the Bank’s annual meetings held in the United Kingdom, in which H.E. Dr. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation and Egypt’s Governor at the EBRD, is participating.

According to the EBRD's report, output growth is expected to increase from 2.4% in FY 2024 to 3.8% in FY 2025 and 4.4% in FY 2026 on a fiscal year basis. On a calendar year basis, the Bank expects growth to reach 4% in 2025 and 4.5% in 2026. Growth rose to 3.9% on year in the first half of FY 2025 (July–December 2024), compared to 2.4% in the same period of the preceding year, driven by the expansion in manufacturing, transportation, and wholesale and retail trade sectors.

The EBRD report pointed to a recovery in the manufacturing sector following a strong contraction during the time of foreign exchange shortages prior to March 2024, in contrast to a decline in output in the oil and gas sector, which the government is seeking to address by setteling of arrears to international energy companies.

The report emphasized that growth outlook depends on the implementation of structural reforms, particularly related to the state’s presence in the economy, in addition to continued reduction of debt levels and associated service costs, noting the risks surrounding the economy are relatively high given international trade policies uncertainty.

H.E. Dr. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation and Egypt’s Governor at the EBRD, commented on the report, stating: “The positive growth forecasts for the Egyptian economy reflect the effectiveness of the economic reform policies,” noting that despite global economic challenges, Egypt’s economic performance indicators showed a remarkable improvement in economic growth during the first and second quarters of the current fiscal year, rising from 3.5% to 4.3%, with growth expected to continue in the third and fourth quarters to record 4% growth rate by the end of the year.

H.E. pointed out that to maintain this growth momentum, the government continues to enhance macroeconomic stability policies and fiscal consolidation, as well as proceeding with the implementation of the National Structural Reform Program, which supports sustainable growth and improves the business environment and investment climate to enable greater private sector participation, adding that the state’s main objective is to achieve private sector-led economic growth, based on tradable and exportable sectors.

The report addressed inflation rates, which declined to 12.8% in February 2025, its lowest level since March 2022, and is expected to continue falling reflecting the Central Bank’s tight monetary policy stance. However, rise fuel prices, as part of the government’s commitment to reach cost recovery by the end of the year under the IMF-supported program, may put upwards pressures on inflation. Net international reserves rose to US$ 47.4 billion in February 2025, their highest level in over 20 years, and are expected to remain stable.

The EBRD report is consistent with the World Bank's forecasts during the Spring Meetings, which predicted economic growth to rise to 3.8% in the current fiscal year and 4.2% in the next fiscal year. The International Monetary Fund (IMF) forecasted that Egypt’s economy will grow by 3.8% in the current fiscal year and 4.3% in the next, with GDP growth expected to rise to 3.8% in FY 2025 and 4.2% in FY 2026, primarily driven by private consumption, declining inflation, and a relative improvement in investor confidence.

H.E. Dr. Rania Al-Mashat added that the expectations of the two largest financial institutions the World Bank and the IMF, followed by the EBRD’s report, for higher growth in Egypt’s economy this fiscal year and the next, reflecting the tangible outcomes of the structural reforms implemented by the state, which focus on improving the investment environment, supporting the private sector, and enhancing economic resilience against shocks, noting that the government aims to achieve comprehensive and sustainable economic growth that contributes to creating real job opportunities and improving living standards, which requires continuing and expanding the scope of the reforms.

H.E. also emphasized the state’s strategic shift toward economic growth based on tradeable and exportable sectors, through stimulating investment, localizing industry, and the integrated measures the government is implementing in terms of simplifying investment procedures and reducing customs clearance time.