Egypt’s Economy Accelerates to 5.1%

Egypt’s economy expanded by 5.1% in fiscal year 2025/26, up from 4.4% a year earlier. Manufacturing, trade and telecommunications together accounted for 48% of GDP growth, while Suez Canal activity and petroleum refining rebounded and tourism maintained positive momentum. The outcome exceeded the IMF’s and World Bank’s latest forecasts, but high borrowing costs, heavy debt-service requirements and dependence on external foreign-currency inflows remain major constraints.

Egypt’s GDP growth reaches 5.1%

Real gross domestic product expanded 5.1% in the fiscal year that ended on June 30, 2026, compared with 4.4% in FY2024/25. Growth in the fourth quarter, covering April through June, was 4.7%.

Non-oil manufacturing was the largest individual contributor to the expansion and grew 9% over the full year. Manufacturing, trade and telecommunications together generated 48% of total GDP growth. Suez Canal activity increased 33.8% in the fourth quarter and 23.3% over the fiscal year, while petroleum refining expanded 22.4% and 8.7%, respectively. Accommodation and food services grew 6.5%, according to figures presented by Planning and Economic Development Minister Ahmed Rostom at a Cabinet meeting on September 3.

Ecofin Agency highlighted the changing composition of Egypt’s expansion, with manufacturing and market services playing a larger role. Some of the fastest growth rates, however, reflect rebounds from depressed levels, particularly in the Suez Canal and refining sectors.

Manufacturing becomes the main engine of growth

Manufacturing had already gained considerable momentum early in the fiscal year. Non-oil manufacturing expanded 14.5% in the first quarter. Motor-vehicle production rose by around 50%, chemicals by almost 44%, beverages by 37%, furniture by 34%, pharmaceuticals by 19% and ready-made garments by about 17%.

Private investment increased 25.9% during the first quarter and accounted for 66% of executed investment, leaving the public sector with a 34% share. The Planning Ministry linked the change to efforts to constrain public investment and create more space for private businesses.

The shift matters for Egypt, where large state-led infrastructure projects have historically absorbed a significant share of investment. The government is seeking to raise the contribution of private capital, manufacturing and export-oriented activities.

Suez Canal activity rebounds from a low base

The Suez Canal’s 23.3% full-year growth rate was among the most striking figures, although it followed a severe contraction. Shipping through the waterway had fallen sharply after carriers diverted vessels away from the Red Sea and around the Cape of Good Hope.

Signs of recovery emerged during the first half of FY2025/26. The number of transiting ships rose 5.8%, net tonnage increased 16% and revenue climbed 18.5% from the same period a year earlier. Between the start of 2026 and February 8, the canal handled 1,315 ships and generated $449 million, compared with 1,243 vessels and $368 million during the corresponding period of 2025, according to the Suez Canal Authority.

The recovery remains dependent on the security of Red Sea shipping routes. Canal receipts are particularly important to Egypt because they provide foreign currency alongside tourism and remittances.

Petroleum refining returns to expansion

Petroleum refining grew 8.7% during the fiscal year after contracting 1.9% in FY2024/25. Fourth-quarter growth reached 22.4%, helped by higher output and refinery maintenance.

The extractive sector remained weaker earlier in the year. Output fell 5.3% in the first quarter, including declines of 6.6% in petroleum and 10.9% in natural gas. By the fourth quarter, extraction returned to positive growth for the first time since the second quarter of FY2022/23.

The turnaround does not remove Egypt’s energy vulnerability. The country still needs to rebuild domestic production while meeting local demand and containing its fuel-import bill.

Telecommunications and digital services expand rapidly

Information and communications activity increased 24.3% in the fourth quarter, placing it among the economy’s fastest-growing sectors.

The expansion was supported by higher telecommunications revenue, digital-service exports, stronger internet infrastructure and new investment. The sector had already grown 14.5% in the first quarter.

Egypt has been seeking to expand exports of software development, outsourcing and technical-support services, using its large labour force and relatively competitive costs. The sector is still smaller in absolute terms than manufacturing or wholesale and retail trade, but its contribution to export earnings and employment is increasing.

Tourism remains a major source of growth and foreign currency

Accommodation and food services expanded 6.5% during FY2025/26. Prime Minister Mostafa Madbouly said around 19.3 million tourists visited Egypt during the fiscal year, exceeding the government’s earlier target of roughly 19 million.

In calendar year 2025, Egypt received almost 19 million international tourists, 21% more than in 2024. Growth was supported by additional air capacity, new hotel rooms and an expanding range of tourism projects and attractions.

Tourism remains critical to the balance of payments because it provides foreign currency and can offset periods of weaker Suez Canal revenue or higher energy-import expenditure.

Egypt beats the latest IMF and World Bank forecasts

The 5.1% outcome was above the International Monetary Fund’s most recent projection. In July, the IMF expected Egypt to grow by about 4.6% in FY2025/26, even after growth reached 5.2% during the first nine months.

The Fund expects the economy to slow to 4.4% in FY2026/27, citing weaker investment, higher financing costs and persistent uncertainty. It has also called for faster progress in reducing the state’s role in the economy and warned about Egypt’s large public-sector financing requirements.

The World Bank’s April outlook was more cautious, forecasting 4.3% growth for FY2025/26. It also highlighted double-digit inflation and the heavy fiscal burden from interest payments. Central-government interest costs were equivalent to 10.6% of GDP and 87.1% of tax revenue in FY2024/25.

Claims that Egypt exceeded every international forecast should therefore be treated cautiously because institutions publish projections at different dates and may use different time conventions. The final result clearly exceeded the latest comparable IMF and World Bank estimates.

High interest rates remain a constraint on investment

Egypt’s stronger GDP growth is taking place under tight monetary conditions. On August 20, the Central Bank of Egypt kept its overnight deposit rate at 19%, the lending rate at 20% and the main-operation rate at 19.5%.

The central bank said restrictive policy remained necessary to anchor inflation expectations. Risks include energy prices, exchange-rate movements and the impact of fiscal consolidation measures.

Borrowing costs close to 20% remain difficult for companies reliant on domestic financing. They also increase the government’s cost of servicing local-currency debt.

Remittances reach a record $47.3 billion

Remittances from Egyptians working abroad reached a record $47.3 billion in FY2025/26, an increase of 29.6% from about $36.5 billion a year earlier. June inflows alone rose 15.6% to approximately $4.2 billion.

The increase, combined with tourism receipts and the gradual recovery of Suez Canal traffic, has strengthened Egypt’s foreign-currency inflows. Net international reserves reached $56.29 billion at the end of July.

Egypt nevertheless remains a significant importer of food, energy and industrial products, leaving the external position sensitive to commodity prices and exchange-rate changes.

Government targets 5.4% growth in FY2026/27

Egypt’s development plan targets 5.4% real GDP growth in FY2026/27 and 6.8% by FY2029/30. Five sectors are expected to account for 64% of the coming year’s growth: manufacturing at 29%, wholesale and retail trade at 11.3%, tourism at 9.3%, construction at 7.2% and agriculture at 7%.

Total investment is targeted at EGP3.7 trillion. Private investment is expected to provide EGP2.2 trillion, or 59%, while public investment is planned at EGP1.5 trillion.

The government’s 5.4% target is well above the IMF’s 4.4% forecast. Achieving it will depend on whether manufacturing can maintain momentum after base effects fade, Suez Canal traffic continues to recover and private investment expands despite high financing costs.

As International Investment experts note, the 5.1% result confirms a meaningful acceleration in Egypt’s economy, but the composition of growth still calls for caution. Manufacturing and digital services are expanding, while some of the strongest gains in Suez Canal activity and refining reflect recovery from unusually weak levels. Interest rates remain close to 20%, debt-service costs are high, and major foreign-currency inflows still depend on tourism, remittances and international shipping. For investors, the more durable test will be whether manufacturing and private investment can sustain their momentum once the rebound effect fades.

FAQ

How fast did Egypt’s economy grow in FY2025/26?

Real GDP expanded 5.1%, compared with 4.4% in the previous fiscal year. Fourth-quarter growth was 4.7%.

Which sectors drove Egypt’s growth?

Manufacturing, trade and telecommunications together accounted for 48% of GDP growth. Non-oil manufacturing expanded 9% and was the largest individual contributor.

Is the Suez Canal recovering?

Yes. Canal activity grew 23.3% over the fiscal year and 33.8% in the fourth quarter, although the increase follows a severe previous contraction.

How fast did Egypt’s telecommunications sector grow?

Information and communications activity expanded 24.3% in the fourth quarter, supported by telecommunications revenue, digital-service exports and infrastructure investment.

How many tourists visited Egypt?

Egypt received about 19.3 million tourists during FY2025/26.

Did Egypt outperform the IMF forecast?

Yes. The IMF’s latest forecast was around 4.6%, compared with the final growth rate of 5.1%.

What is Egypt’s growth outlook for FY2026/27?

The government targets 5.4% growth, while the IMF forecasts about 4.4%.

What are the main risks to Egypt’s economy?

The main risks include high borrowing costs, public debt and debt-service expenses, import dependence, volatile energy prices and exposure of tourism and Suez Canal revenues to external disruptions.