Central Bank of Egypt Expects Economic Growth Slowdown Amid Regional Tensions
The Central Bank of Egypt expects Egypt’s real GDP growth to slow in the coming period due to the ongoing regional conflict and geopolitical tensions, despite the economy maintaining positive growth momentum during the first quarter of 2026.
According to the central bank’s latest Monetary Policy Committee statement, Egypt’s real GDP growth recorded approximately 5.0% during Q1 2026, compared to 5.3% in the fourth quarter of 2025. The bank indicated that growth is expected to moderate further during the second quarter of the year as regional developments continue to weigh on economic activity.
The Central Bank of Egypt projected average economic growth of around 5.0% for the 2025/2026 fiscal year, noting that the economy is still operating below full capacity, with expectations of reaching full operational capacity by the first half of 2027.
The bank explained that the current output gap is expected to help contain demand-side inflationary pressures over the short term, supported by the continuation of restrictive monetary policy measures.
In its assessment of labor market conditions, the central bank noted that Egypt’s unemployment rate declined to 6% during the first quarter of 2026, down from 6.2% in the previous quarter, reflecting continued improvement in several economic and employment indicators.
The bank also warned that inflation rates are likely to accelerate through the third quarter of 2026 due to supply-side pressures linked to regional tensions, exchange rate movements, and fiscal adjustment measures, before gradually easing starting from the first quarter of 2027.
The Monetary Policy Committee recently decided to maintain key interest rates unchanged, reflecting the central bank’s cautious monetary stance amid persistent inflation risks and heightened regional and global geopolitical uncertainty.