French bank BNP Paribas predicts Egypt’s economic growth to reach 4% in FY2025

Cairo – February 20, 2025: BNP Paribas forecasted Egypt’s economy to grow by 4 percent in fiscal year 2025, marking a gradual recovery following a challenging fiscal year in 2024 due to a deep balance of payments crisis, according to a research note published last week and seen by Business Today Egypt.

The bank attributed this recovery to substantial international financial support and key factors such as the stabilization of the foreign exchange market and easing foreign currency liquidity tensions, which were crucial for Egypt’s import-dependent economy.

While the depreciation of the Egyptian pound had slowed and inflation was trending downward, the report highlighted that Egypt’s recovery would not be without challenges, especially with structural issues in public finances and external accounts still needing resolution.

The policies of the new U.S. administration were not expected to significantly impact Egypt’s external accounts.

The initial phase of Egypt's recovery was expected to be driven by household consumption, which traditionally accounted for around 80 percent of the country’s GDP. Consumption showed signs of recovery in the first half of fiscal year 2025, although uncertainties remained in the short term.

BNP Paribas expected a more balanced economic recovery to take hold by the start of 2026.

Despite signs of recovery, household disposable income remained impacted by persistently high inflation, and public sector investment was not expected to provide significant support due to ongoing fiscal consolidation under the IMF programme.

Private sector investment was projected to pick up only from 2026 onwards, as current capacity utilization remained below 70 percent, not enough to spark a significant increase in investment.

 

BNP Paribas also forecasted a significant easing in inflation, which hit 24.1 percent in December 2024, confirming the downward trend that had begun in September of the same year.

This decline was primarily driven by a sharp fall in food prices and the stabilization of the exchange rate.

The bank expected inflation to average 19.8 percent in fiscal year 2025, with a further slowdown to around 10 percent by 2026.

As inflation slowed, BNP Paribas predicted that the Central Bank of Egypt would begin a cycle of monetary easing in 2025.