The International Monetary Fund (IMF) has raised its forecast for Egypt’s real GDP growth in 2026 to 5.1%, up from 4.2% in its April projections, citing resilient economic activity, strong remittances and continued tourism performance.
In its latest Regional Economic Outlook for the Middle East and Central Asia, the Fund increased its growth forecast by 0.9 percentage points. It maintained its estimate for 2025 at 4.4% and projected growth to moderate to 4.7% in 2027.
The IMF said Egypt’s economic activity remained resilient during the first half of 2026, with growth broadly in line with the second half of the previous year. Remittances from Egyptians working abroad and tourism continued to support the economy, while hotel occupancy rates remained stable or higher than a year earlier despite regional tensions.
Inflation and Currency Pressures Persist
Despite the improved growth outlook, the IMF highlighted persistent inflationary pressures and currency depreciation.
Annual headline inflation in Egypt reached 14.5% in August 2026, driven by higher food and energy prices, as well as the impact of exchange-rate depreciation on domestic prices.
The Fund expects inflation to ease modestly in 2026 but warned that the subsequent decline is likely to be slower than anticipated in its April forecast. It raised its inflation projections by 3.6 percentage points compared with its previous estimates.
The report also noted that Egypt’s nominal effective exchange rate had fallen by around 6% since February, contrasting with the broader regional trend of currency appreciation.
Debt and Global Financing Risks
The IMF warned that Egypt remains vulnerable to higher global borrowing costs because of its substantial financing requirements and debt refinancing needs.
It said a further deterioration in global financial conditions could trigger capital outflows, increase exchange-rate pressures and raise sovereign bond yields, tightening domestic financing conditions and potentially weighing on private investment and economic growth.
The Fund also cautioned that a reversal in global market trends or oil prices rising above baseline assumptions could renew inflationary pressures and prompt major central banks to keep interest rates elevated for longer, increasing government borrowing costs.
Although Egypt’s public debt is expected to remain high over the medium term, the IMF’s baseline outlook points to an overall improvement in fiscal conditions.
IMF Calls for Fiscal Reforms
To strengthen fiscal sustainability, the Fund recommended increasing government revenues by broadening the tax base, improving tax administration and enhancing compliance.
It also urged Egypt to improve public spending efficiency and prioritize expenditure that supports economic growth and social equity, particularly infrastructure, human capital development and targeted social protection.
The IMF emphasized the importance of transparent, credible and enforceable fiscal frameworks to maintain public debt sustainability while limiting the economic costs of fiscal adjustment.
Regional Growth Outlook Improves
Across the region’s oil-importing economies, the IMF raised its 2026 growth forecast to 4.2%, compared with 3.9% in 2025, driven mainly by improved projections for Egypt and Tunisia.
The Fund expects regional growth to accelerate to 6.6% in 2027, supported largely by an anticipated recovery in hydrocarbon production among oil-exporting countries affected by the regional conflict.
However, higher food and shipping costs continued to add to inflationary pressures across several regional economies in 2026, with price growth expected to ease in 2027, albeit more slowly than previously projected in some countries.