Egypt’s real GDP growth is projected to rise to 4% in fiscal year (FY) 2025, up from 2.4% in FY 2024, supported by improving economic confidence, according to global credit rating agency Fitch.

Growth is expected to increase further to 4.7% in FY 2026, driven by stronger real income gains, though Fitch notes this remains “slightly below the potential growth rate.”

The Egyptian government remains firmly committed to its agreement with the International Monetary Fund (IMF), which prioritizes restoring macroeconomic and fiscal stability. However, Fitch noted there has been “more limited structural reform to boost competitiveness and avoid the re-emergence of external imbalances in the medium term.”

Ongoing reforms include improvements to the tax system, fewer tax exemptions for state-owned enterprises, and streamlined customs procedures. However, the agency noted that progress on state divestment has been “modest.”

Fitch has reaffirmed Egypt’s long-term foreign-currency issuer default rating at “B,” with a stable outlook.

The fiscal deficit is projected to widen by four percentage points in FY 2025 to 7.4% of GDP. This reflects the absence of last year’s one-off revenue from the Ras El-Hekma deal—equivalent to 3.3% of GDP—and continued high-interest payments on public debt.

Regional instability has also weighed on the economy, notably reducing revenues from the Suez Canal. Fitch expects these receipts to only partially recover in FY 2026, reaching around 60% of their 2023 levels.

Tourism has shown resilience despite regional tensions. “Further escalation of conflict is a moderate risk to tourism revenue,” Fitch warned, although the sector grew 5% in FY 2024 and is projected to expand by 9% in FY 2026.