Egypt's economy is expected to expand by 4.8 per cent in fiscal year 2025/26 and 5.1 per cent in 2026/27, the Central Bank of Egypt (CBE) said in its Monetary Policy Report on Wednesday. The central bank attributed the growth to an anticipated monetary easing cycle that will boost private sector credit growth, investment and demand. It added that the growth will be driven mainly by manufacturing and services, alongside a gradual rebound in Suez Canal activity in FY2025/26. The output gap is expected to narrow steadily, with output reaching its potential by the end of FY2025/26. "Real GDP growth is projected to reach 4.8 percent and 5.1 percent in FYs 2025/26 and 2026/27, respectively, supported by the anticipated progress in the easing cycle. This will reflect positively on the real growth of private sector credit, boosting demand and investment across sectors, particularly manufacturing and services." the report read. The CBE's nowcast points to sustained recovery in the second quarter of 2025, with GDP growth likely close to the 4.8 per cent recorded in the first quarter – the fastest since the fourth quarter of 2022. Activity in the first quarter was buoyed by non-petroleum manufacturing, tourism, stronger consumption and net exports, which benefited from improved competitiveness after the unification of the foreign exchange market. The report noted that demand-side inflationary pressures remain muted, supported by the current monetary stance and a still-negative output gap. Real wages remain below their long-term trend, signalling limited inflationary risks from the wage channel. Attribution: Amwal Al Ghad English Download
