Views and indicators vary regarding the scenarios expected for the Egyptian economy during the new fiscal year, which began in July. Despite continuous official reassurances over recent months about the recovery of economic indicators that had suffered from a severe crisis for years, Egyptians remain fearful of further inflation and price increases.
The Sixth Economic Census, issued a few days ago by the Central Agency for Public Mobilization and Statistics (CAPMAS), presented the most recent picture of Egypt’s economic activity structure and the composition of enterprises. It showed shifts in sectoral distribution and business size. However, the census alone is insufficient to judge whether real recovery has occurred, according to observers. Monetary, fiscal, and external indicators—which in practical terms represent real growth, inflation, budget deficit, and sources of foreign currency—have shown tangible improvement since the beginning of 2024, though the economy remains fragile.
Although growth has returned to approach rates of 4% to 4.5% in fiscal year (2024/2025), according to the latest census, and the overall annual inflation rate fell to 6.8% in December, the public deficit, public debt, external trade pressures, and reliance on exceptional inflows—such as Gulf investments and land sale agreements—still pose risks to sustainability and, according to observers, signal less optimistic prospects.
Observers who spoke to Zawia3 believe that dependence on external inflows—whether in the form of loans, investments, or agreements with Gulf sovereign funds—provides temporary relief but cannot serve as a long-term solution. Exceptional resources do not build a sustainable economy; they merely buy additional time to reorganize priorities. In contrast, the state needs genuine structural reform in its tax and fiscal management systems, aimed at broadening the tax base and stimulating production rather than consumption, while ensuring disciplined spending directed toward productive sectors such as industry, agriculture, and technology.
Cautious Recovery
At the end of September, the Ministry of Planning, Economic Development, and International Cooperation announced that Egypt’s economy grew by 4.4% during fiscal year (2024–2025), compared to 2.4% in the previous fiscal year. The ministry explained that the gross domestic product (GDP) recorded a quarterly growth rate of about 5% in the fourth quarter of fiscal year (2024–2025)—the highest in three years—compared to 2.4% during the same quarter of the previous year, according to the official statement.
Egypt’s fiscal year begins on July 1 and ends on June 30 of the following year. The ministry affirmed that economic performance during the past fiscal year helped raise the annual growth rate to 4.4%, surpassing the targeted rate of 4.2%, describing this as evidence of the “resilience of the Egyptian economy in the face of repeated external shocks.” It attributed the growth to economic policies supporting macroeconomic stability, improved governance of investment spending, and enhanced private-sector participation within the framework of the National Structural Reform Program.
The ministry clarified that growth in the fourth quarter was driven by strong performance in several key sectors, most notably tourism, non-oil manufacturing, and information and communications technology (ICT). The non-oil manufacturing index rose by 18.8% during the fourth quarter, compared to 4.7% in the same quarter of the previous year, supported by expansions in industries such as automotive (126%), pharmaceuticals (52%), and ready-made garments (41%).
Dr. Taghreed Badr El-Din, Assistant Professor of Economics at the Faculty of Politics and Economics, Beni Suef University, describes the current phase of Egypt’s economy as one of “cautious recovery.” She stresses that while macroeconomic performance indicators show tangible improvement in growth and monetary stability, the recovery still requires deeper structural reforms to ensure sustainability.
In an exclusive statement to Zawia3, Badr El-Din explained that the International Monetary Fund (IMF)’s May 2025 projections indicate that Egypt’s economy is expected to achieve a growth rate of 4.3% in 2025, compared to only 3% in the previous year. Similarly, the World Bank raised its forecast to 4.2% for fiscal year (2025/2026), with the possibility of reaching 4.6% the following year. She attributed this improvement to the rise in foreign investment in infrastructure and energy, as well as the implementation of a new financial and monetary reform program worth $8 billion with IMF support.
Badr El-Din emphasized that these indicators “do not mean the economy has completely escaped the circle of pressure,” but rather point to a relative stabilization after a sharp decline—particularly with the improvement in the exchange rate, the restoration of confidence in government debt instruments, and the rise in foreign currency reserves.
She continued: “The IMF itself noted in its July 2025 report that Egypt has made significant progress toward macroeconomic stability, with improved indicators of fiscal deficit and inflation and reduced pressures on the balance of payments. However, it also stressed that progress in structural reforms remains partial, and that the road ahead is still long to strengthen the private sector’s role and reduce the state’s dominance over economic activity.”
The economics professor also confirmed that Egypt’s monetary policy succeeded in curbing inflation, which had previously exceeded 35%, bringing it down to 15.2% in the second quarter of 2025—the lowest level since 2022—thanks to exchange-rate improvements and lower sovereign risk. She predicted that inflation would remain at current levels until the end of the year before gradually declining during 2026, reaching the target of 7% ±2 percentage points in the last quarter of 2026.
Conversely, she warned that public debt risks persist, noting that updated IMF estimates expect external debt to rise from $162.7 billion in (2024/2025) to more than $200 billion by 2030. She stressed that this “requires genuine fiscal discipline and an increase in non-tax revenues to avoid additional burdens on the state budget.”
She added: “Among the ongoing challenges is the investment environment, which still suffers from bureaucracy and a lack of clarity in competition rules, despite government efforts to launch a new investment map and expand private-sector participation in state projects.”
Badr El-Din also pointed out that external factors play a fundamental role in shaping Egypt’s economic trajectory, explaining that the repercussions of the war in the Middle East have affected Suez Canal revenues, while fluctuations in energy prices have imposed additional pressures on the budget. However, the flexibility of the services and tourism sectors helped absorb part of these shocks, as the number of tourists increased by 12% in 2025 compared to the previous year.
She concluded: “The Egyptian economy has indeed entered a stage of gradual recovery supported by more disciplined fiscal and monetary policies. Yet, this recovery remains unbalanced and largely dependent on capital inflows and pending reforms. It is not an illusion, as some claim, but neither is it a complete achievement. It is simply a delicate transitional phase that could either evolve into genuine progress through bold structural reforms or falter if the measures remain partial and temporary.”
The Dominance of the Private Sector: Has the State Abandoned Its Role?
The results of Egypt’s Sixth Economic Census revealed that 99.85% of all economic establishments are owned by the private sector, reflecting an almost complete retreat of the public sector from direct economic activity. However, this does not necessarily indicate improvements in efficiency or productivity. The census recorded 3.852 million private establishments out of a total of 3.858 million nationwide, compared to only 0.15% owned by the public and public business sectors.
The census also showed that most private establishments are small in size, have limited capital, and operate in low–value-added sectors such as trade and retail. This indicates the near disappearance of the public sector’s direct role in economic activity, without necessarily implying higher efficiency or productivity. It further noted that the number of workers in these establishments reached around 15.234 million, of whom 14.311 million are employed in the private sector—representing 93.9%—even though wages paid by the private sector account for 80.2% of total wages. These figures highlight the structure of the Egyptian economy, which depends heavily on small and informal private-sector enterprises engaged in low–value-added activities.
In terms of investment, the contribution of investment and inventories to GDP showed noticeable improvement, turning from negative to positive, while the share of public investment declined to 43.3%, compared to a rise in private investment to 47.5%—the highest level in five years, according to the statement.
The census also revealed that the informal economy has expanded to levels estimated to exceed 90% of private-sector activity in some industries. This poses a dual challenge: a weak tax base and the difficulty of integrating these activities into the formal financial system.
On the geographical level, the census highlighted a clear regional disparity in the distribution of enterprises. Economic activity is concentrated in the governorates of Cairo, Giza, and Alexandria, while Upper Egypt and Sinai suffer from a noticeable weakness in productive activity, reflecting the imbalance in regional development.
This expansion coincides with the International Monetary Fund (IMF)’s requirements for continuing Egypt’s economic reform program, which emphasize strengthening the private sector’s role as part of broader structural reforms, improving the business environment, and ensuring greater economic efficiency. The IMF views the focus on the private sector as a way to ease pressure on public finances, stimulate private investment, and create new job opportunities—all consistent with its goals of supporting macroeconomic stability and enhancing Egypt’s long-term competitiveness.
Public Finances and Debt
According to the statement issued by the Ministry of Planning, the activity of the Suez Canal continued to decline due to geopolitical tensions, recording a drop of 48.5% during the fourth quarter and 52% for the fiscal year. The oil and natural gas sectors also contracted, despite the partial resumption of some field development operations in the fourth quarter.
Regarding public finances, Egypt recorded a record primary surplus of 629 billion pounds ($13.03 billion), equivalent to 3.6% of GDP, marking an 80% increase compared to the surplus achieved in fiscal year (2023–2024). However, the trade deficit and rising external debt continued to place sustained pressure on the budget. External debt rose from $162.9 billion in December 2024 to $165.5 billion in March 2025, while the trade deficit widened to $50 billion, up from $41.6 billion the previous year, driven by a 13.2% increase in imports compared to a modest 6.5% growth in exports.
At the same time, official statements indicate that Egypt’s debt-to-GDP ratio has fallen from 118% in 2017 to around 85% by mid-2025, with a target of reducing it further to 79% in 2026 if current fiscal policies continue. IMF data also show that Egypt’s public debt-to-GDP ratio stood at 90.93% in 2024 and is expected to decline to 86.59% this year, approaching 85% thereafter.
In early October, the Ministry of Finance announced the issuance of dual-tranche international sovereign sukuk worth $2 billion—the first international issuance of the current fiscal year—as part of efforts to strengthen external financing.
While the government highlights the $2 billion sovereign sukuk issuance as a step to bolster foreign financing, the move also underscores Egypt’s growing reliance on external borrowing to meet its fiscal needs. This reliance raises questions about the sustainability of Egypt’s fiscal policies, especially amid rising external debt levels and persistent trade deficits. Such dependence could increase the economy’s vulnerability to global fluctuations and international interest rate shifts, weakening the state’s ability to manage public finances without affecting future debt obligations or curbing investment spending essential for economic growth.
For his part, Alex Segura-Ubiergo, the IMF’s Resident Representative in Cairo, stated that Egypt has made significant progress on its economic reform path, but “the greatest challenge remains the continuation of structural reforms that strengthen competitiveness and generate new jobs.”
Speaking at a seminar organized by the Egyptian Center for Economic Studies in Cairo last September on the performance of global and local financial markets, Segura-Ubiergo added that the global economy is going through a period marked by “high levels of uncertainty,” driven by debates over tariffs and geopolitical tensions, which complicate the management of economic policies. He noted that the easing of financial market tensions in recent months has had a positive impact on the situation in emerging markets.
As for inflation, it declined from levels exceeding 35% in 2023 to around 12% by the end of 2025—an important achievement in terms of price stability, yet one that has not yet translated into improved purchasing power for citizens. The middle and lower classes continue to bear the lingering effects of previous price hikes, while real wages remain at their low levels. Consequently, the improvement in macroeconomic indicators does not necessarily translate into better living conditions, nor does it mean that the economy has entered a phase of full recovery; it may simply indicate relative stability within the boundaries of crisis, nothing more.
For his part, Dr. Karim El-Omda, Professor of Political Economy, told Zawia3 in an exclusive statement:
“We cannot say that the Egyptian economy is currently experiencing a boom. The more accurate description is that we are in a phase of stabilization after crisis, or what could be called a ‘pause in the bleeding.’ In recent years, we were moving from bad to worse; now, the deterioration may have stopped, and indicators have started to improve gradually. We are not yet at the stage of achievement or breakthrough, but we are certainly no longer on the same downward slope we once were.”
El-Omda points out that this relative improvement stems from exceptional deals the state resorts to—what he describes as tools used in times of severe economic crises when investments stall and economic activity slows. He adds: “During deep crises, we cannot wait for foreign investments to flow in naturally, so we turn to exceptional solutions to inject immediate liquidity into the economy, helping the economic cycle move again. But we cannot rely on such mechanisms permanently; they are only a temporary push that must be followed by genuine structural reforms built on the principles of market mechanisms, investment, industry, and production.”
El-Omda stresses that a true prosperity phase requires long-term stability spanning at least ten years of continuous work and real growth, not just a single year of improvement. “It is inaccurate to claim that Egypt is now in a state of prosperity,” he explains, “because prosperity is achieved only after years of sustained growth. What is happening now is that we are merely leaving the intensive care room—the patient is beginning to move and speak, but has not yet recovered enough to run or endure great exertion.”
The academic and economic expert further emphasizes that continued improvement requires prudent fiscal and monetary policies and a strong parliament capable of overseeing the government and supporting reforms. “We cannot assess the economic path before at least five years have passed—by 2028 or 2029,” he insists. “Only then can performance be evaluated based on the increase in citizens’ purchasing power, the clear growth of exports, and their improved ratio to imports. These are the indicators through which we can truly say the Egyptian economy is recovering.”
n the same context, Dr. Mahmoud El-Garraf, Professor of International and Economic Law, notes that Egypt’s real economic growth rate reached around 4.5% during fiscal year 2024/2025, compared to 3.8% in the previous year. He explains that this growth is primarily driven by the manufacturing, energy, communications, and tourism sectors, which form the backbone of economic activity.
El-Garraf told Zawia3 that World Bank projections indicate continued growth within the range of 4.2% to 4.6% in 2026, emphasizing that this outlook depends largely on exchange-rate stability and an improved investment climate—both of which are crucial for attracting foreign capital and enhancing economic sustainability.
He also pointed out that Central Bank of Egypt (CBE) data released in September 2025 showed the annual inflation rate declining to 27%, down from over 33% in the first quarter of the year. This decrease, he said, reflects a relative improvement in price control and support for citizens’ purchasing power.
Regarding monetary policy, El-Garraf noted that the CBE announced an increase in foreign currency reserves to $48.2 billion in September 2025, the highest level since 2019, reinforcing the state’s ability to withstand external shocks and maintain currency stability.
He added that the overall budget deficit fell to 6.4%, thanks to higher tax revenues and improved performance in the tourism sector and Suez Canal revenues. Meanwhile, Egyptian exports rose by 9% in the first half of 2025, driven by increased demand for fertilizers, gas, and agricultural goods, while imports declined by 4% due to the higher cost of the dollar and efforts to encourage local production.
Despite these positive indicators, El-Garraf warns that structural challenges persist—particularly the burden of public debt, weak domestic production, and the rising cost of living for the middle class. He concludes by noting that international institutions expect the Egyptian economy to remain in a phase of “cautious stability” through 2026, provided that economic reforms continue and foreign investments keep flowing.
What Is the Solution?
It is worth noting that one of the key indicators of Egypt’s apparent recovery lies in the improvement of the balance of payments during fiscal year 2025, as the current account deficit fell to about $13 billion, down from $17 billion the previous year. However, this improvement did not stem from an increase in industrial exports or high–value-added services, but rather from a temporary rise in tourism revenues, continued Gulf investments in projects such as the New Administrative Capital and the North Coast, along with certain debt restructuring measures.
On the other hand, the country faces mounting pressure on its traditional sources of foreign currency: declining Suez Canal revenues due to Red Sea disruptions, a slowdown in remittances from Egyptians abroad affected by exchange-rate disparities, and rising import bills for strategic goods and energy.
The fiscal deficit—the gap between government revenues and expenditures—remains a burden on Egypt despite some progress, highlighting the need for more efficient allocation of financial resources. The fiscal deficit narrowed by 3.28% of GDP, reaching 560.6 billion pounds ($11.63 billion) in the first five months of fiscal year 2024/2025 (July–November 2024). However, government spending rose by 9.8%, reaching 1.38 trillion pounds ($28.57 billion), with debt interest payments alone increasing by 2.3%, amounting to 730.6 billion pounds ($15.12 billion) during the same period. The overall budget deficit reached 4.15% of GDP between July and December 2024, according to a recent study by the Egyptian Center for Alternative Policy Solutions (Markaz Huloul).
According to Dr. Gouda Abdel-Khalek, former Minister of Social Solidarity and Professor of Economics at Cairo University, as cited in the same study, Egypt’s efforts to contain its fiscal deficit should focus on improving the efficiency of existing investments rather than merely expanding their volume. He emphasized the need to enhance the efficiency of production factors and their contribution to domestic industrial output. These efforts, he said, should be directed toward sectors where Egypt has comparative advantages, such as clean-energy-oriented manufacturing, agriculture, and industry.
This means that the Egyptian economy remains vulnerable to external shocks, and that the apparent external recovery has not yet translated into sustainable improvement in the export structure or trade balance. Perhaps the most pressing challenge is not in the numbers themselves, but in how they translate into people’s lives. The inflation that eroded incomes over the past two years has left a deep impact on the middle class, which has lost much of its purchasing power. Despite a modest increase in wages and pensions, it remains insufficient to bridge the gap between income and the cost of living.
The labor market also suffers from sluggish job creation. Most enterprises recorded in the census fall into the category of small and microenterprises, which lack the capacity to hire large numbers of workers or offer competitive salaries. In the absence of real expansion in productive sectors, employment opportunities remain limited—widening the social gap further. This equation renders any discussion of “economic recovery” incomplete unless it is accompanied by a social recovery that restores trust and purchasing power for the broader segments of the population.
