Why the IMF has a positive outlook ONLY on Egypt
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The International Monetary Fund’s April 2025 World Economic Outlook nudged Egypt’s growth projections slightly higher—2.4 percent for calendar-year 2024 and 3.8 percent for 2025—at the very moment it sliced 0.5 percentage point off expected world output because of an escalating tariff war led by Washington.
Egypt gains while the neighborhood loses
Egypt is now the only major Middle East and North Africa economy seeing an upgrade; the Fund trimmed the region’s 2025 forecast to just 3 percent, citing weaker oil prices and conflict spill-overs.The split reflects Cairo’s progress on an IMF-backed reform program and a handful of large Gulf investments, even as most of its neighbors face lower hydrocarbon revenues and mounting political risk.
Canal losses and conflict undercut foreign earnings
Those better growth numbers mask a gaping hole in hard-currency inflows. Missile and drone attacks on Red Sea shipping have diverted vessels around the Cape of Good Hope, costing Egypt about EGP 110 billion ($2.15 billion) in Suez Canal tolls during the nine months to March and pushing 2024 canal receipts down almost two-thirds from 2023. The canal normally supplies roughly 2 percent of GDP in foreign-exchange income, so every month of disruption tightens the country’s external-financing squeeze.
Debt load and reform milestones keep Cairo on a tightrope
Public debt climbed to 90.9 percent of GDP last fiscal year, well above the emerging-market median, even after the government posted a record primary surplus. Under a 46-month Extended Fund Facility approved in 2022, authorities let the pound float in March 2024, lifted interest rates to 27.25 percent to quell inflation, and pledged to curb quasi-fiscal spending by state-owned entities. Fresh Gulf money—most visibly ADQ’s $24 billion land-rights payment for the Ras El-Hekma megaproject—is easing near-term reserve pressure but does not erase the need for continued privatizations and subsidy reform.
Inflation relief may be on the horizon
Consumer-price growth, which peaked at 33.3 percent last year, is projected by the IMF to slow to 19.7 percent in 2025 and 12.5 percent in 2026 as food-supply bottlenecks ease and the stronger pound filters through to import prices. Much will depend on the central bank’s ability to hold real rates positive without choking credit to the private sector and on whether global commodity costs remain subdued.
Trump tariffs send global forecast to a post-pandemic low
Outside Egypt, the picture darkened sharply after President Donald Trump’s April tariff orders lifted duties on Chinese goods to an eye-watering 145 percent and imposed a universal 10 percent levy on almost all other imports. The IMF now sees world GDP expanding only 2.8 percent in 2025—its weakest pace since the COVID-19 crisis—and world trade volumes growing a meager 1.7 percent, less than half last year’s rate. U.S. growth is trimmed to 1.8 percent, with spill-overs dragging down Canada, Mexico and the euro area.
Ripple effects for MENA exporters and importers
Tariffs have a mixed impact on the region: oil exporters may benefit from higher energy-sector investment as supply chains re-route, yet non-oil economies such as Egypt face softer European demand for textiles, fertilizers and tourism.The IMF’s baseline assumes some easing of Red Sea hostilities and a gradual rebound in oil output; if either assumption fails, regional growth could undershoot by as much as 0.6 percentage point, Fund staff warn.
What analysts are watching next
Exchange-rate credibility: Markets will scrutinize whether the pound trades freely once the seasonal Ramadan-tourism inflows fade.
Budget realism: The draft 2025/26 budget targets a primary surplus of 4 percent of GDP and a debt fall to 82.9 percent—ambitious goals that hinge on deeper subsidy rationalization and tax administration gains.
Canal recovery timeline: If military escorts succeed in reducing insurance premiums, diverted shipping could return faster than the IMF’s reference scenario implies.
Tariff détente: Any U.S.–China truce that lowers duties would lift global trade and, by extension, Suez traffic and European demand for Egyptian exports.
Egypt’s upgraded forecast is less a growth renaissance than a vote of confidence that officials can keep steering through rough seas: record-high tariffs abroad, a shipping chokepoint at home, and a debt burden that leaves little room for policy error. The coming year will test whether structural reforms and Gulf capital can outrun the drag from protectionism and conflict-driven shocks.