Egypt's economy gains momentum as growth accelerates

Egypt's economy is gaining momentum, with growth accelerating and inflation easing, even as the country continues to grapple with deep structural challenges.

Growth reached 5.3% in the first quarter of the 2025/26 fiscal year, up from 4.4% for the previous year, surpassing expectations. The government is targeting GDP growth of 5.4% in the 2026/27 budget as it seeks to consolidate the recovery.

Inflation, which has battered household budgets, is on a downward path. Analysts project it to ease toward around 10% in 2026 and to converge with the central bank's target range by the end of the year, marking a sharp disinflation from earlier highs.

But the recovery sits on fragile foundations. High debt-service costs, a steep drop in Suez Canal revenues amid regional tensions, declining domestic gas production and heavy wheat imports continue to strain public finances. International lenders have also criticised the outsized role of the military in the economy.

The government has pledged support for economic activity and the energy sector, while betting that reforms and foreign-exchange inflows will sustain the rebound. For many Egyptians, however, the test will be whether faster growth and slowing inflation translate into real relief from a prolonged cost-of-living squeeze.