IMF Raises Egypt’s 2026 Growth Forecast to 5.1% Amid Stronger Economic Activity
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, marking an increase of 0.9 percentage points, according to the IMF’s latest Regional Economic Outlook for the Middle East and Central Asia.
The Fund expects Egypt’s economic growth to moderate to 4.7% in 2027, while maintaining its forecast of 4.4% for 2025. Its 2031 growth projection was also left unchanged from the April outlook.
Economic Activity Shows Resilience
The IMF attributed the upward revision to the continued resilience of Egypt’s economic activity during the first half of 2026.
Real GDP growth remained close to the levels recorded in the second half of 2025, supported by resilience across several economic indicators.
The Fund highlighted workers’ remittances and tourism as key sources of support for the Egyptian economy. Net remittances to Egypt as a share of GDP exceeded the levels recorded during the same period a year earlier.
Tourism also remained relatively resilient despite regional tensions, with hotel occupancy rates in Egypt staying stable or rising compared with 2025.
Exchange Rate Remains Under Pressure
The IMF said currency pressures across the region remained limited through August 2026, with most economies recording nominal effective exchange-rate appreciation since February.
Egypt was among the exceptions, with its nominal effective exchange rate declining by around 6% since February, placing it alongside a limited number of regional economies, including Algeria and Tunisia, that recorded declines in this measure.
Inflation Reaches 14.5%
Egypt’s headline inflation rate rose to 14.5% year-on-year in August 2026, according to the report.
The IMF linked the inflationary pressures to higher food and energy prices, as well as the impact of exchange-rate depreciation on domestic prices.
Although the Fund expects inflation in Egypt to slow moderately during 2026, it warned that the subsequent disinflation process is likely to be slower than previously anticipated in April.
The IMF also raised its inflation forecast for Egypt by 3.6 percentage points compared with its previous projection, reflecting continued price pressures that have been stronger than expected.
Global Financing Costs Pose Risks
The IMF warned that Egypt remains exposed to higher global borrowing costs because of its substantial financing needs.
A tightening of international financial conditions could increase pressure on countries facing significant refinancing requirements, including Egypt.
The Fund noted that a reversal in global market trends or a rise in oil prices above baseline assumptions could renew inflationary pressures and encourage major central banks to keep interest rates elevated for longer periods.
Such developments could increase the cost of government borrowing.
Public Debt Remains a Key Challenge
Egypt’s public debt is expected to remain high over the medium term, although the IMF’s baseline scenario generally points to an improvement in fiscal conditions during this period.
The Fund warned that a deterioration in global financial conditions could trigger capital outflows, intensify exchange-rate pressures, raise sovereign bond yields and tighten domestic financing conditions.
These developments could weigh on investment, private-sector credit and overall economic growth.
IMF Calls for Stronger Fiscal Management
Against the backdrop of high public debt and limited fiscal space to absorb shocks, the IMF called on Egypt to strengthen government revenues.
The Fund recommended broadening the tax base, improving tax administration efficiency and increasing tax compliance.
It also urged Egypt to improve the efficiency of public spending and reprioritize expenditures in ways that protect growth-enhancing and socially equitable spending.
The recommendations particularly include continued investment in infrastructure, human capital and targeted social protection.
Clear Fiscal Frameworks Needed
The IMF stressed the importance of establishing clear, transparent and enforceable fiscal frameworks.
According to the Fund, stronger fiscal frameworks would reinforce commitment to medium-term public debt sustainability while helping reduce the economic cost of fiscal adjustment.
Growth Outlook for Oil-Importing Economies
Across the region’s oil-importing economies, the IMF raised its 2026 growth forecast to 4.2%, compared with 3.9% in 2025.
The revision was driven mainly by stronger growth expectations for Egypt and Tunisia.
The Fund expects regional growth to accelerate to 6.6% in 2027, supported primarily by an anticipated recovery in hydrocarbon production among oil-exporting countries affected by the regional conflict.
On inflation, the IMF said higher food and shipping costs contributed to increased price pressures across several regional economies during 2026.
It expects inflation to continue declining in 2027, although the pace of improvement is likely to be slower than previously projected in some countries.