Moody’s forecasts 5% growth for Egypt’s economy by FY25/26

Moody’s raised Egypt’s growth projection for the 2025/2026 fiscal year, according to its emerging markets report released on Tuesday.

The rating agency expects Egypt’s economy to expand 5 per cent in the 2025/2026 fiscal year, while it cut its projections for the current fiscal year to only 4 per cent.

Moody’s also expects Egypt’s average inflation rate to fall to 16 per cent in the next fiscal year, down from the current 27.5 per cent, before further decreasing to 13 per cent by 2026.

The report highlights stable economic and financial conditions that are expected to enhance credit quality for governments, businesses, and institutions in emerging markets during 2025. Moody’s notes that GDP growth across these markets remains steady overall, supported by slowing inflation and the beginning of interest rate cuts.

Additionally, the agency points to narrowing credit spreads and rising bond issuance as signs of increasing investor interest in emerging market bonds. This growing appetite is fostering a positive cycle of higher investment inflows, stronger currencies, and reduced asset risks, further fueling GDP growth.

Moody’s also foresees a slight reduction in the average debt-to-GDP ratio for emerging market governments next year, driven by lower interest rates and stronger revenue streams that will help narrow fiscal deficits.

However, the agency warns that mandatory expenditures, including debt-related obligations, continue to constrain fiscal improvement. While interest rates are expected to trend downward, they will likely remain high enough to weigh on debt sustainability.

Attribution: Amwal Al Ghad Arabic