Here are the ways Egypt’s economy is showing signs of revival

After years of turbulence caused by regional conflicts, global inflation, and foreign currency shortages, Egypt’s economy appears to be regaining its footing. A recent report by the European Bank for Reconstruction and Development (EBRD) forecasts a promising rebound in economic growth, projecting GDP to reach 4.4% in the fiscal year 2025/2026. For a country that has navigated some of the harshest macroeconomic storms in recent memory, this projection signals a shift in trajectory—one driven by reform, resilience, and renewed global confidence.

Reform-driven recovery

The EBRD’s revised outlook follows a period of economic strain, during which Egypt's real GDP dipped to just 2.4% in FY2023/2024. This downturn stemmed largely from persistent foreign exchange shortages, regional conflict fallout, and rising debt burdens. However, the government's commitment to reform—backed by a multi-billion dollar IMF-supported program—is beginning to bear fruit.

Central to this recovery is Egypt’s tightened monetary policy, in place since March 2022. The Central Bank of Egypt (CBE) raised interest rates to contain inflation and attract foreign capital, helping to cool consumer price growth. Inflation has since retreated from crisis-era highs to a manageable 12.8% as of February 2025, its lowest in three years. This progress has allowed the government to cautiously focus on sustainable growth while ensuring price stability.

Manufacturing and trade take center stage

Much of the recent economic upswing has come from a resurgence in the real economy. In the first half of FY2024/2025, Egypt posted a 3.9% year-on-year growth rate—up from 2.4% the previous year—thanks to solid performances in manufacturing, wholesale and retail trade, and transportation.

The manufacturing sector, once crippled by the foreign exchange crunch, is now bouncing back. Export-oriented industries such as engineering, textiles, and plastics have seen renewed activity, supported by a more stable exchange rate and better access to inputs. In February 2025 alone, exports surged by over 24% compared to the previous year, driven by double-digit growth in petroleum products, garments, and food preparations.

This rebound has also translated into a narrower trade deficit. Egypt’s trade gap in February 2025 shrank by 29.1% year-on-year, reaching $2.33 billion—its lowest in recent memory. This was aided not only by stronger exports but also a modest decline in import values, reflecting tighter import controls and increased local substitution.

Remittances offer critical support

Perhaps one of the most surprising and welcome developments has been the surge in remittances from Egyptians abroad. From March 2024 to February 2025, remittance inflows hit a record $32.6 billion—a 72.4% increase year-on-year. These inflows have provided a vital buffer for the balance of payments, helping stabilize foreign currency reserves and support domestic demand.

The strength of these transfers reflects not only the resilience of the Egyptian diaspora but also recent incentives and regulatory changes aimed at encouraging remittance through official channels. In February 2025 alone, Egyptians abroad sent home $3 billion, marking the 12th straight month of year-on-year increases.

Challenges in the energy sector

Despite the positive momentum, the path ahead is not without obstacles. The EBRD report flags ongoing declines in the oil and gas sector as a major area of concern. Production shortfalls and unresolved arrears to international energy companies continue to weigh on investment in the sector. As Egypt aims to position itself as an energy hub, resolving these issues will be key to sustaining long-term growth.

Fuel prices are also expected to rise as the government moves toward cost recovery pricing—an IMF condition that could place upward pressure on inflation and erode household purchasing power if not carefully managed.

External risks remain high

Beyond domestic challenges, Egypt remains vulnerable to global volatility. The EBRD report points to mounting international trade uncertainties, new US tariffs, and geopolitical risks—including ongoing conflicts in Ukraine and the Middle East—as potential drags on growth.

Egypt’s reliance on portfolio inflows for external financing also leaves it exposed to shifts in global investor sentiment. While international reserves have climbed to an all-time high of $48.1 billion in April 2025, maintaining this buffer will require sustained foreign capital and disciplined economic management.

Strategic vision for 2030

Looking further ahead, Egypt has laid out a strategic economic roadmap aiming to boost annual exports to $115.8 billion and reduce imports to $105 billion by 2030. These goals reflect a shift toward a more export-led model, with particular emphasis on non-oil sectors such as engineering, agri-processing, and digital services.

Policy committees covering macroeconomics, entrepreneurship, tourism, and technology have been tasked with steering implementation. The country’s long-term ambition remains clear: to become a competitive, diversified economy resilient to external shocks.

Conclusion: A cautious but hopeful resurgence

Egypt’s economic story is entering a new chapter. While risks abound—from regional instability to global protectionism—there is a growing sense that the worst may be behind. The combination of firm policy action, reform implementation, and increased global support is helping the Egyptian economy move from recovery to resilience.

If current trends hold, and structural reforms continue at pace, the projected growth rates of 4% to 4.5% in the coming fiscal years may be more than just numbers on a page—they could mark the dawn of a more stable and prosperous economic future for Egypt.