CBE says recovery is underway after two tough years, with manufacturing and energy sectors fueling rebound
After nearly two years of economic slowdown, Egypt’s economy seems to be shaking off the dust. The Central Bank of Egypt (CBE) has issued a brighter outlook, forecasting real GDP growth of 4.3% for the fiscal year ending in June 2025.
That’s almost double the 2.4% recorded the previous year—a strong signal that Egypt may be getting back on its feet after weathering multiple local and global shocks.
Manufacturing starts to breathe again
Factories are moving again. That’s the headline coming from the central bank’s latest Monetary Policy Report.
The manufacturing sector, hit hard by foreign currency shortages and disrupted supply chains, is finally showing signs of life. This resurgence is largely thanks to the unification of exchange rates, which the CBE says has made it easier for manufacturers to import raw materials and semi-finished goods.
The easing of import restrictions has unclogged the pipelines that feed Egypt’s industrial base. This, in turn, is helping factories ramp up operations. It’s not a miracle, but it’s momentum—and that’s something the country hasn’t seen in a while.
One paragraph, one sentence: It’s been a long wait.
And here’s what the CBE points to as the drivers behind this uptick:
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Unified exchange rate improving access to hard currency
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Revival of stalled production lines in key sectors
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Stabilization of supply chains
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Increased investor confidence in domestic manufacturing
This isn’t just about turning machines back on—it’s about restoring confidence.
Oil and gas set to carry more weight
Energy is stepping into the spotlight. With new discoveries in both onshore and offshore oil and gas reserves, Egypt is expected to see a bump in extractive sector output.
The CBE highlighted these developments as a key contributor to its optimistic forecast for 2025 and beyond.
The ministry of petroleum recently confirmed successful exploration projects in the Western Desert and the Mediterranean. These aren’t just press release wins—they’re long-term plays that could solidify Egypt’s role as a regional energy hub.
Just one sentence here: Natural gas, in particular, could become Egypt’s golden ticket.
There’s a strategic element too. With Europe actively seeking alternatives to Russian gas, Cairo’s exports may find increasingly eager buyers across the Mediterranean.
What’s changed? A look at the numbers
The past few years haven’t been kind. Egypt’s GDP growth had slumped amid a whirlwind of inflation, war-driven food insecurity, and currency pressure.
For context, these figures are still modest compared to Egypt’s pre-pandemic highs. But after nearly flatlining, any acceleration counts.
And two back-to-back years of upward revisions—if they hold—may help restore credibility to fiscal planning efforts that were under pressure during the crisis years.
Policy moves that made a difference
The Central Bank didn’t just watch from the sidelines.
In addition to floating the pound and removing currency restrictions earlier this year, the CBE also coordinated with fiscal authorities on structural reforms. Many of those reforms were conditions tied to recent financing agreements with the IMF and other global lenders.
Not every policy was popular. But the short-term pain may be paying off.
Two sentences now: Interest rates were kept tight to contain inflation. And while borrowing costs remain high, inflation itself has started to ease.
There’s also been a push to incentivize local production—especially in food and pharmaceuticals—as part of Egypt’s broader economic strategy.
Still, risks remain on the radar
It’s not all smooth sailing yet.
The CBE was quick to note that risks to growth persist, both domestically and internationally. Geopolitical tensions in the region, unpredictable global commodity prices, and investor wariness could all throw sand in the gears.
A one-liner here: The Red Sea shipping disruptions haven’t gone away.
Egypt also faces internal hurdles—public debt remains high, and youth unemployment continues to be a persistent problem despite new job creation in energy and construction.
If global interest rates stay high, Egypt could face fresh capital outflows. That’s a concern for a country that relies heavily on external financing.
What’s next?
Looking ahead, the Central Bank projects growth of 4.8% for FY2025/2026, slightly higher than this year’s forecast. It’s a sign of cautious optimism—but the keyword there is “cautious.”
How the government manages inflation, foreign direct investment, and energy exports will likely decide if this recovery turns into sustained expansion—or fizzles out.
