Egypt’s central bank cuts real GDP growth forecasts on Iran-US conflict risks
Egypt’s central bank lowered its forecasts for economic growth over the next two fiscal years, citing the impact of the Iran-US conflict on tourism and Suez Canal activity, according to its Monetary Policy Report released on Monday.
The Central Bank of Egypt (CBE) said it now expects real GDP growth to reach 4.9 per cent in fiscal year 2025/26 and 4.8 per cent in 2026/27, down from previous estimates of 5.1 per cent and 5.5 per cent, respectively.
The central bank said the downgrade “reflects the implications of the Iran–US conflict for domestic economic activity.”
The revision was mainly driven by weaker expectations for tourism, one of Egypt’s key foreign currency earners, amid widespread airspace closures across the region.
“The downward revision is primarily driven by a weaker contribution from tourism, based on the assumption that tourist nights will decline given widespread airspace closures, particularly at the main air travel-route hubs.” the report said.
The report also pointed to continued pressure on Suez Canal revenues, another major source of foreign exchange for Egypt, as disruptions in Red Sea shipping persist.
The central bank said: “… the outlook reflects a potentially weaker contribution from Suez Canal activity, as the previously projected gradual recovery in net tonnage has been deferred to Q1 2027, as opposed to Q3 2026.”
Despite the downgrade, the bank said non-oil manufacturing and services were expected to “continue supporting overall real GDP growth over the forecast horizon.”
It also said extractive industries were likely to improve, supported by recent oil and gas discoveries.
“Extractions’ activity is expected to improve, supported by successful onshore and offshore discoveries that are anticipated to boost Egypt’s crude oil and natural gas production over the medium term,” the report said.
Attribution: Amwal Al Ghad English