Economic Outlook in Egypt
Egypt’s business community is eagerly awaiting the Central Bank of Egypt’s (CBE) Monetary Policy Committee meeting, hoping for measures to support the macroeconomy. The past few months have seen international and local experts highlighting improving economic indicators, which has strengthened expectations that the central bank will begin lowering interest rates.
Positive Economic Indicators
The current interest rates of 24% on deposits and 25% on overnight lending are considered excessively high. Several factors support the case for lowering interest rates, including a stable exchange rate, easing inflationary pressures, rising revenues from tourism and exports, and the US Federal Reserve’s hints at lowering rates. Annual urban consumer inflation slowed to 13.9% in July, down from 14.9% in June, further strengthening the case for easing.
Forecasts and Expectations
Most analysts agree that a cut in interest rates is on the horizon, although opinions vary over its size. Forecasts range from a reduction of 1 to 3 percentage points, while prominent businessman Naguib Sawiris has called for a more aggressive 4-point cut. Economist Ahmed Moati expects the central bank to cut rates by 2% this week, with scope for further reductions in subsequent meetings. Research by HC Securities and Investment also forecast a 200-basis-point cut, citing macroeconomic improvements and shifting geopolitical dynamics.
Economic Growth and Stability
The Egyptian pound has strengthened to EGP 48.30 per dollar, compared to around EGP 52 weeks earlier. Unemployment fell to 6.1% in Q2 2025, down from 6.3% in Q1. The non-oil private sector showed signs of stabilization in July, with employment rising for the first time in nine months, according to S&P Global’s Purchasing Managers’ Index. Foreign exchange inflows are also increasing, with portfolio and official investments continuing to support confidence in the pound.
Investment and Remittances
Standard Chartered noted that expectations are high that more than half of a $12.5 billion investment pledge from Qatar and Kuwait will be disbursed by year-end. Remittances surged 60% year-on-year in March, further improving the current account outlook. According to a Reuters poll of 13 economists, Egypt’s economy likely grew by 4% in the fiscal year ending June 2025, up from earlier projections of 3.8%. Growth in the current fiscal year is expected to reach 4.6%, supported by IMF-backed reforms and a gradual recovery in manufacturing.
Conclusion
In conclusion, Egypt’s economic outlook appears to be improving, with a stable exchange rate, easing inflationary pressures, and rising revenues from tourism and exports. The expected cut in interest rates is likely to further support the macroeconomy, encouraging investment and growth. While challenges remain, including a high external debt burden, the overall trend is positive, and the business community is optimistic about the future. As Prime Minister Mostafa Madbouly recently declared, Egypt has overcome its recent economic crisis, and what is needed now is for citizens to actually see lower prices.
