The World Bank has kept its economic growth forecast for Egypt unchanged at 4.3% for the current fiscal year, a slight decline from 4.4% recorded last year, signaling cautious stability amid regional uncertainty.

In its latest Middle East, North Africa, Afghanistan & Pakistan Economic Update – April 2026, the institution pointed to stronger-than-expected performance in the first half of the fiscal year, along with resilient private consumption and a pickup in private investment, as key factors supporting the outlook. However, the pace of disinflation is slowing, weighed down by spillover effects from the ongoing conflict in the Middle East.

Inflation is now projected to average 13.6% this fiscal year, down from 20.9% previously, while the current account deficit is expected to stabilise at 4.2% of GDP. However, fiscal pressures are mounting, with the budget deficit forecast to widen to 7.6% of GDP, compared with 7.1% last year.

The report highlights broader regional risks, noting that escalating tensions, including the war in Iran, have amplified inflationary pressures by driving up oil and gas prices. These dynamics are also disrupting tourism revenues, remittance flows, and investor confidence across affected economies, including Egypt, Jordan, and Pakistan.

Market reactions have been swift. Despite being geographically removed from direct conflict zones, stock markets in Egypt and Morocco fell sharply by 12% and 9%, respectively, within a week of the escalation, highlighting the fragility of investor sentiment across the region.