According to the latest country risk report from Fitch Solutions’ research unit, BMI, Egypt is poised for stronger economic performance in the coming years, supported by robust domestic demand, rising investment, and export growth.The report forecasts GDP growth of 4.7 percent in FY 2025/2026, increasing to 5.0 percent in FY 2026/2027. Key drivers include rising household consumption, wage increases across both the public and private sectors, and a more favorable trade environment.Looking further ahead, BMI expects annual growth to average 4.6 percent between 2026 and 2034, significantly above the 3.8 percent recorded 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 percent 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 percent to 14.4 percent, citing softer price pressures in July. Inflation is expected to average 12.5 percent in the second half of 2025, before dipping further to 10.0 percent in 2026, aligning with the Central Bank of Egypt’s target range of 5 percent-9 percent 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 percent of GDP in FY 2025/2026 to 6.1 percent the following year, significantly below the historical average of 10 percent. BMI expects Egypt’s public debt-to-GDP ratio to decline from 88.3 percent in June 2025 to 84.3 percent 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 percent 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 percent of total spending to 46 percent, and from 73 percent of revenues to 63 percent by mid-2027.BMI foresees a gradual improvement in Egypt’s external balances. The current account deficit is forecast to narrow to 3.6 percent of GDP in FY 2025/2026 and further to 3.1 percent 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 percent 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. (ICE IL CAIRO)

Fonte notizia: Egypt Today