Egypt’s GDP to climb to 5.1 percent by 2025: OECD

According to the latest report by the Organisation for Economic Co-operation and Development (OECD), Egypt’s GDP is set to grow to 5.1 percent by the fiscal year 2025-2026. The report suggests the growth will be driven by growing consumption if inflation declines and fiscal support gradually withdraws. The report also underscores the importance of renewed reform efforts to navigate the current economic landscape.

Growth outlook

The OECD projects Egypt’s GDP growth to moderate to 3.2 percent in fiscal year 2023-2024, with a gradual increase by fiscal year 2025-2026. Despite expectations of consumption growth, challenges persist, including weak investment amid tight financing conditions and subdued export growth amidst regional tensions.

High domestic inflation, peaking at 40.4 percent in September 2023, has dampened consumption, weakened the currency, and hindered investment. However, inflation has begun a gradual descent to 31.2 percent in January 2024. Despite that decline, the OECD stresses the necessity of restrictive monetary policy until Egypt’s inflation reaches target levels. Hence, this is essential for bolstering consumer confidence and fostering sustainable growth.

Fiscal challenges

Egypt faces significant financing needs amidst a substantial budget deficit. The initial 2023-2024 budget aimed at increasing the primary budget surplus to 2.5 percent of the gross domestic product (GDP). However, the overall budget deficit will remain substantial at -7.5 percent due to high spending on interest payments.