The International Monetary Fund (IMF) projects global GDP growth for 2025 at around 3.2 per cent, as the world economy continues to navigate the headwinds of trade tensions, inflationary pressures, and regional instability. Across emerging markets and developing economies, fortunes remain uneven: while commodity exporters benefit from higher prices and stronger public investment, oil-importing nations contend with elevated external vulnerabilities and slower reform momentum.
Against this backdrop, Egypt’s economy is quietly scripting a comeback story. Once burdened by external debt and currency depreciation, the country now stands on firmer ground, buoyed by deliberate policy reforms, renewed private investment, and growing international confidence. According to the IMF’s World Economic Outlook 2025, Egypt’s real GDP growth is expected to rise to 4.3 per cent in FY2024/25 and 4.5 per cent in FY2025/26, up from 2.4 per cent in FY2023/24. Inflation, which averaged 33.3 per cent in 2024, is forecast to moderate to 20.4 per cent in 2025 and 11.8 per cent by 2026, a clear signal that the government’s stabilisation measures are beginning to take effect.
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This encouraging outlook is reinforced by Egypt’s own Ministry of Planning, Economic Development and International Cooperation (MPED), which reported that real GDP growth reached 4.77 per cent in the third quarter of FY2024/25, the highest quarterly rate in three years, compared with 2.2 per cent in the same period a year earlier. The average growth for the first nine months of the fiscal year stood at 4.2 per cent, reflecting both structural resilience and a rebound in productive sectors.
Egypt’s economic resurgence has not been accidental. The government’s National Structural Reform Programme has deepened structural adjustments in production, export diversification, and industrial expansion. These efforts have been complemented by prudent fiscal policies and a willingness to engage international partners through transparent, data-backed reforms.
Private sector performance lies at the heart of this momentum. MPED data show that private investment grew by 24.2 per cent year-on-year at constant prices, surpassing public investment for the third consecutive quarter. Private firms accounted for 62.8 per cent of total implemented investments, signalling a decisive shift toward a market-driven economy.
Public investment, meanwhile, contracted by 45.6 per cent, reflecting fiscal consolidation efforts. Despite this restraint, government spending remains focused on critical social sectors, particularly through the Decent Life Initiative (Hayah Karima), which continues to drive rural infrastructure, healthcare, and education. This careful balance between restraint and inclusivity has preserved stability while allowing private enterprise to take the lead in recovery.
Engines of Growth: Industry, Tourism, and Trade
The manufacturing sector, particularly non-oil industries, has emerged as a bright spot in Egypt’s growth narrative. MPED reports that non-oil manufacturing expanded by 16.03 per cent in Q3 2024/25, reversing a contraction of around 4 per cent in the same quarter of the previous year. Sub-sectors such as motor vehicles (+93 per cent), ready-made garments (+58 per cent), and beverages (+34 per cent) illustrate how industrial output is gaining momentum.
Tourism, long one of Egypt’s economic pillars, has also rebounded strongly, recording a 23 per cent rise in the hotels and restaurants sector during the same quarter. Increased international arrivals and infrastructure upgrades have helped position Egypt as a top destination for both leisure and business travel.
Trade performance has further supported the recovery. Net exports contributed about 2.7 percentage points to overall GDP growth in the third quarter, as total exports rose by 54.4 per cent, outpacing import growth of 18.7 per cent. This robust export surge demonstrates the success of Egypt’s strategy to diversify beyond traditional markets and promote locally manufactured goods.
Balancing Strength with Structural Strain
Despite the strong momentum, Egypt’s economy remains uneven across sectors. Activity on the Suez Canal fell by 23.1 per cent amid global shipping disruptions linked to conflicts in the Red Sea region, while the extractives sector, encompassing oil and gas, contracted by 10.38 per cent (with oil production down 9.52 per cent and natural gas down 20.5 per cent).
Yet, these declines have been partly offset by the dynamism of non-oil industries, tourism, and services, underscoring Egypt’s gradual diversification away from hydrocarbon dependency. The government’s continued investment in renewable energy, especially solar and green hydrogen, further signals a strategic pivot towards sustainable growth aligned with global climate and energy frameworks.
Inflation Moderates, Confidence Rises
For ordinary Egyptians, the most visible change is the slow easing of inflation. Having peaked above 33 per cent in 2024, inflation is expected to fall to about 20 per cent by the end of 2025, aided by improved exchange rate management, enhanced agricultural output, and a measured reduction in import costs.
The Central Bank of Egypt’s policies, particularly tighter monetary controls and flexible exchange rates, have anchored this moderation. As inflation recedes, the cost of borrowing has begun to ease, reviving business confidence and stimulating domestic consumption. This, in turn, has reinforced a virtuous cycle of investment and production.
Partnerships and Policy
Egypt’s cooperation with the International Monetary Fund and its engagement with development partners have been crucial to sustaining the reform agenda. The IMF’s extended facility programme, renewed in 2024, has not only provided financial cushioning but also policy credibility.
Foreign Direct Investment has rebounded accordingly, with inflows exceeding $12 billion in 2024, driven by Gulf partnerships, European investments, and multinationals entering Egypt’s renewable energy, logistics, and manufacturing sectors. This renewed investor confidence is also linked to Egypt’s ongoing improvements in regulatory transparency and ease of doing business.
The country’s strategic location, connecting Africa, Asia, and Europe, continues to amplify its economic significance. With the Suez Canal and surrounding industrial zones serving as global trade arteries, Egypt remains a key node in international supply chains despite temporary disruptions.
Social Investment Amid Fiscal Prudence
In its Economic and Social Development Plan for FY2025/26, Egypt’s government projects GDP growth of 4.5 per cent, aligning closely with IMF expectations. Public investment is capped at EGP 1.154 trillion, with nearly 47 per cent of treasury-funded spending directed to health, education, and social services.
This approach reflects a deeper commitment to sustainable and inclusive development, one that ties macroeconomic stability to human capital progress. By anchoring growth in social investment, Egypt seeks not only to stabilise its economy but to expand opportunity for its population.
Egypt’s recovery story in 2025 is not merely about stabilisation; it is about reinvention. The government’s Vision 2030 framework positions the country to transition toward a knowledge-based, industrialised economy that competes globally. Targets include sustaining annual growth above 5 per cent, reducing unemployment to below 6.5 per cent by 2027, and achieving a primary budget surplus exceeding 2.5 per cent of GDP.
Challenges remain, from external debt obligations to the risk of renewed global shocks but Egypt’s policy coherence and reform momentum have created a pathway that blends ambition with realism. The convergence of private sector dynamism, international confidence, and disciplined governance suggests that Egypt’s growth is no longer episodic, but structural.
