EBRD sees Egypt’s growth at 3.2% in ’24, 4.5% in ’25
The European Bank for Reconstruction and Development (EBRD) forecasts Egypt’s economy to grow at 3.2 per cent in 2024 and 4.5 per cent in 2025.
According to EBRD’s latest Regional Economic Prospects report, inflation remains high, yet it has been moderating, declining from a peak of 38.0 per cent in September 2023 to 25.7 per cent in July 2024.
“Inflation has moderated across the region, most notably in Egypt as foreign exchange issues were gradually resolved.” the report read.
EBRD said the expansion in the retail and wholesale trade, agriculture, communications and real estate sectors “counterbalanced sharp contractions” in the gas and non-oil manufacturing industries.
The EBRD further said that Egypt’s external accounts recovered since the devaluation of the Egyptian pound in March 2024 buoyed by increased financial inflows from international partners and investors, along with a rise in foreign exchange reserves to their highest level in five years.
“External accounts have recovered since the devaluation of the exchange rate in March 2024, supported by FDI inflows related to the Ras El Hekma deal (US$24 billion) and portfolio flows of over US$23 billion.”
“To rein in public investment, the government announced a budgetary limit of EGP 1 trillion (US$ 21 billion) in the FY25 budget. Private investment has been sluggish but recent indicators suggest a pickup in activity.”
Downside risks to Egypt’s economic outlook include continued disruptions in the energy and electricity sectors and potential delays in implementing structural reforms as part of its International Monetary Fund (IMF) programme, the EBRD noted.
Forecast for SEMED Region
EBRD’s report forecasts growth in the southern and eastern Mediterranean (SEMED) is forecast at 2.1 per cent for the first half of 2024. This is slightly down on the 2.7 per cent in the same period last year. However, EBRD said the growth is expected to pick up to 2.8 per cent in 2024 as a whole and 3.9 per cent in 2025.
This moderation is also a downward revision on EBRD’s previous forecast for 2024 owing to a slower-than-expected recovery in private and public investment and disruptions in the energy sector in Egypt, severe droughts in Morocco and Tunisia, and the impact of the war in Gaza on the economies of Jordan and Lebanon.
Attribution: The EBRD
Subediting: M. S. Salama
