EBRD forecast for Egypt's economic growth in 2024 slips by 0.6% in latest report

Cairo – May 16, 2024: Egypt’s economic growth was forecasted to slip by 0.6 percent to 3.9 percent for 2024 by the European Bank for Reconstruction and Development (EBRD) in its latest report, citing “reform uncertainty” and foreign currency shortages.

For the current fiscal year (FY2023/2024), the bank slashed its projections by 1.8 percent to 3 percent in its latest Regional Economic Prospects report.

High interest rates, “persistently high inflation,” and escalating “tensions in the Middle East endangering investor confidence, tourism and trade flows” attributed to the downward revision.

However, the EBRD anticipates the economy to recover in 2025, expecting an uptick to 4.4 percent while forecasting a climb to 4 percent for the coming fiscal year (FY2024/2025).

In its report, the bank noted that Egypt’s economic activity has been supported by public spending as well as the tourism, construction and services sectors.

It added that “thanks to significant donor support and macroeconomic stabilization under a revised IMF program approved in March 2024, the outlook for the next fiscal year (2025) is more favorable”.

The bank’s expectations for FY2023/2024 are more optimistic compared to other forecasts so far; Egypt anticipates a 2.9 percent uptick while the World Bank currently predicts Egypt’s growth at 2.8 percent for the current fiscal year.

On the other side of the coin, its growth forecast for the coming fiscal year is lower than Egypt and the IMF’s prediction of 4.2 percent and the IMF’s 4.4 percent.

The EBRD highlighted the Suez Canal’s fall in revenues, caused by security concerns over the war on Gaza and Houthi attacks on ships near the canal’s entrance, “was more than compensated by recent commitments from international partners”.

It added that Egypt has benefitted from support from the IMF and international donors, contributing to further macroeconomic stability.

Regionally, the EBRD noted that the southern and eastern Mediterranean region (which includes Egypt) displayed resilience amid the war on Gaza and climbing political and security tensions.

The region’s average growth was projected to climb to 3.4 percent in 2024 as economic reforms and stabilization programs’ impact increases.

However, the EBRD warned that there are major risks remaining relating to potential escalation of tensions in the Middle East.