These estimates represent a 0.1 percentage point increase from previous forecasts, with growth expected to accelerate to 5.4 percent in FY 2027/2028. This improved outlook is attributed to the economy's resilience against geopolitical tensions and a faster-than-anticipated recovery in Suez Canal activity, which saw revenues rise 29 percent year-on-year in the first quarter of 2026. Manufacturing, services, and tourism are identified as key growth drivers, with the extractive sector also expected to improve in FY 2027/2028.
Despite these positive projections, the Central Bank of Egypt warns that inflationary pressures and regional developments remain significant risks. Headline inflation averaged 14.6 percent in the second quarter, and is expected to rise temporarily in the third quarter before declining. The bank forecasts average inflation of 16.6 percent in FY 2026/2027, aiming for a target of 7 percent, plus or minus 2 percentage points, by the second half of 2027.
Egypt's external position has strengthened, with net international reserves increasing to $55.1 billion by the end of June and the Egyptian pound appreciating against the US dollar. However, the current account deficit more than doubled to $5.1 billion in the first quarter of 2026, driven by wider trade deficits and a larger net inv
