BMI attributed this outlook largely to private consumption, which is expected to remain the economy's main growth engine, reaching 87% of GDP by 2034.
Egypt’s economy is on track for accelerated growth in the coming fiscal years, driven by a mix of rising domestic consumption, increased investment, and stronger exports, according to the latest country risk report by Fitch Solutions’ research unit, BMI.
BMI projects Egypt’s GDP will grow by 4.7% in FY 2025/2026, climbing further to 5.0% in FY 2026/2027. The outlook is buoyed by stronger household spending, wage hikes in both public and private sectors, and improving external trade. Over the longer term, growth is forecast to average 4.6% annually between 2026 and 2034, marking a notable improvement from the 3.8% average between 2010 and 2019.
BMI attributed this outlook largely to private consumption, which is expected to remain the economy's main growth engine, reaching 87% of GDP by 2034.
For the first time in three years, investment is expected to rise, aided by reduced global trade tensions—especially surrounding US tariffs—eased geopolitical risks, and falling interest rates. The report highlights that foreign direct investment (FDI) inflows will be key to this turnaround, alongside government efforts to make the business environment more attractive.
Investment growth is forecast to continue gradually from 2026 through 2034, although fiscal consolidation measures will likely limit public sector spending.
Egypt’s inflation is projected to decline steadily into 2026, underpinned by a stable exchange rate and completed fiscal reforms. BMI recently revised its 2025 inflation forecast downward from 15.3% to 14.4%, citing softer price pressures in July. Inflation is expected to average 12.5% in the second half of 2025, before dipping further to 10.0% in 2026, aligning with the Central Bank of Egypt’s target range of 5%-9% by the final quarter of that year.
On the currency front, the Egyptian pound is forecast to trade between EGP 48 and 50 per US dollar, assuming that portfolio inflows remain steady. Foreign reserves, which stood at $49.0 billion at the end of July, are projected to surpass $50 billion by 2026, providing coverage for approximately four months of imports.
The fiscal deficit is expected to narrow from 6.6% of GDP in FY 2025/2026 to 6.1% the following year, significantly below the historical average of 10%. BMI expects Egypt’s public debt-to-GDP ratio to decline from 88.3% in June 2025 to 84.3% by the end of FY 2026/2027, thanks to a combination of robust nominal GDP and primary budget surpluses.
Revenue growth is projected to average 14.5% over the next two years, supported by ongoing tax reform, improved VAT enforcement, and expected revenues from privatization initiatives. Meanwhile, interest payments—currently the largest government expenditure—are anticipated to fall from 50% of total spending to 46%, and from 73% of revenues to 63% by mid-2027.
BMI foresees a gradual improvement in Egypt’s external balances. The current account deficit is forecast to narrow to 3.6% of GDP in FY 2025/2026 and further to 3.1% in FY 2026/2027. Contributing to this are recovering revenues from the Suez Canal, robust tourism, increased remittances, and growing exports.
Egypt’s exports to the US alone jumped 15% year-on-year in the first half of 2025, largely due to competitive pricing from the currency depreciation and favorable tariff arrangements compared to Asian textile producers.
Despite the improving outlook, BMI flagged persistent structural challenges, such as state dominance in the economy, slow progress on privatization, and limited financial inclusion. Although Egypt has advanced on several IMF-backed reforms, delays in privatizing state and military-owned companies have postponed crucial program reviews.
The fifth and sixth IMF reviews under the country’s $8 billion loan agreement have been merged, with the next assessment now expected in October 2025.
To address upcoming external obligations, Egypt is expected to rely on a mix of debt and investment inflows. BMI reports that the country plans to issue $4 billion in international bonds, secure $4 billion in Qatari investment in a North Coast tourism project, and retain access to $4.7 billion in IMF funds through 2026.
Portfolio inflows will play a central role in bridging financing gaps. However, BMI warns that this reliance on volatile capital flows leaves the economy vulnerable to external shocks. The report notes that $20–25 billion in portfolio funds could be at risk of outflows if global investor sentiment turns sharply negative.
