Egypt economic outlook remains resilient despite global headwinds

The bank pointed to continued macroeconomic stability, robust foreign exchange inflows, and substantial investment pledges as key drivers of confidence in the country’s prospects.

The report highlighted that strong foreign exchange (FX) inflows from portfolio investments and official financing are bolstering the Egyptian pound.

It is expected that the significant commitments from Gulf partners — $12.5 billion from Qatar and Kuwait — will be at least half disbursed before the end of 2025.

Despite the Central Bank of Egypt’s (CBE) ongoing monetary easing cycle, the high-yield environment continues to attract carry trade inflows. This, coupled with successful trials of foreign exchange convertibility, has strengthened investor sentiment.

Shift towards structural reform
 

As per the report, the International Monetary Fund (IMF) is expected to intensify its focus on structural reforms, calling for tighter fiscal policies and accelerated privatization.

Such measures are intended to complement capital inflows, paving the way for sustainable medium-term growth.

The report maintained its GDP growth forecast for the current FY2025/2026 at 4.5 percent, underscoring the central role of private sector investment in Egypt’s economic recovery.

“The Egyptian economy is on a promising path. We expect the current account deficit to narrow, supported by a remarkable 60 percent year-on-year surge in remittances as of March, alongside a recovering export sector,” said Mohammed Gad, CEO of Standard Chartered Egypt.

Inflation and monetary policy outlook
 

Inflation remains elevated in the 13–17 percent range, with persistent cost pressures in healthcare, food, and transport, according to the report.

However, the report projected the CBE to proceed cautiously with further rate cuts, targeting a year-end policy rate of 19.25 percent.

For FY2025/2026, inflation is forecast to average 11 percent, reflecting an expected easing of price pressures while acknowledging lingering supply-side constraints.

Global growth context
 

The bank’s global outlook is slightly less optimistic than earlier in the year, with its 2025 world GDP growth forecast revised down to 3.1 percent from 3.2 percent.

This adjustment reflects continued downside risks, particularly from trade policy uncertainty in major economies such as the United States, China, and the Euro area.

Despite a softer global growth profile, Standard Chartered identifies several bright spots. In the Middle East, economic activity is expected to benefit from the reversal of OPEC+ oil production cuts and sustained efforts to diversify away from hydrocarbons.

Growth in Sub-Saharan Africa is projected at 4.1 percent, supported by relatively lower exposure to volatile global trade flows. However, the bank stresses that structural reforms remain essential to unlocking the region’s full potential.

Asia is forecast to lead the global growth rankings in 2025 at 4.9 percent, followed by the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region at 3.4 percent.

In contrast, major developed economies are expected to expand by just 1.3 percent.

Resilience amid global shifts
 

The report emphasized that Egypt’s ability to attract foreign investment and maintain currency stability despite global uncertainties demonstrates a high degree of economic resilience.

It said sustained reform momentum, particularly in privatization and fiscal consolidation, will be critical to securing long-term growth.

While inflationary pressures and global market volatility remain challenges, Standard Chartered asserted in its report that Egypt’s proactive policy measures and strong investor engagement provide a solid platform for navigating the current economic cycle.