Egypt’s economic recovery is expected to continue through 2027, with the European Bank for Reconstruction and Development (EBRD) forecasting real GDP growth of 4.6% in 2026 and 5.0% in 2027 in its September 2026 Regional Economic Prospects.

The outlook comes as stronger activity in communications, trade, and petroleum refining is supported by rising foreign-exchange inflows and improving external buffers.

The EBRD said Egypt and Jordan showed notable resilience during the first half of 2026 despite the economic impact of the conflict in the Middle East. The wider southern and eastern Mediterranean region, however, is projected to contract by 0.7% in 2026, largely due to sharp downturns in Iraq and Lebanon.

Growth strengthens

Egypt’s real GDP grew 5.0% year on year in the first half of 2026, compared with 4.8% during the same period of 2025. The EBRD attributed the acceleration primarily to continued growth in communications, trade, and petroleum refining.

Manufacturing growth moderated following a strong performance in 2025, but overall economic activity continued to expand.

The latest figures build on Egypt’s recovery in FY2024/25, when GDP growth reached 4.4%, up from 2.4% the previous year. The IMF attributed the improvement to a broad-based recovery across non-oil manufacturing, transportation, finance, and tourism.

Foreign-exchange inflows strengthen

Egypt’s external position has improved alongside the economic recovery. According to the EBRD, remittances and tourism receipts rose 36.3% and 9.4%, respectively, bringing the combined inflows cited in the report to $16.9 billion.

Net international reserves reached $56.3 billion in July 2026, according to the EBRD. Central Bank of Egypt (CBE) data showed reserves rising further to $57.2 billion at the end of August, a new record.

Remittances have been a particularly important source of foreign currency. Egyptians working abroad sent home a record $47.3 billion during FY2025/26, up 29.6% from $36.5 billion a year earlier, according to CBE data.

The stronger inflows have helped rebuild Egypt’s foreign-currency buffers and reduce pressure on its external financing position.

IMF programme advances

The improvement in external conditions has coincided with continued progress under Egypt’s IMF-supported reform programme.

By July, Egypt had completed seven of eight reviews under the IMF Extended Fund Facility (EFF) and two of three reviews under the Resilience and Sustainability Facility (RSF). Total disbursements under the two programmes had reached approximately $7.3 billion.

The IMF’s July review released around $1.8 billion and said Egypt had entered the latest period of external stress with stronger macroeconomic conditions, supported by economic growth, declining inflation, and higher reserves.

Monetary conditions have also eased. The CBE had cut interest rates by a cumulative 825 basis points before pausing its easing cycle, according to the EBRD. At its September 24 meeting, the central bank kept the overnight deposit rate at 19%, the overnight lending rate at 20%, and the main operation rate at 19.5%.

Inflation remains elevated but has moderated from the peaks recorded during the recent inflation shock. The EBRD reported inflation in the 12%-15% range during the first half of 2026, while CBE data showed annual urban headline inflation at 14.5% in August, down from 14.9% in July.

Regional outlook remains challenging

Egypt’s growth outlook comes against a difficult regional backdrop. The EBRD expects the southern and eastern Mediterranean region to contract by 0.7% in 2026, largely reflecting severe economic contractions in Iraq and Lebanon. Excluding Iraq, the region is projected to grow 3.9% in 2026 and 4.3% in 2027.

Egypt’s improving growth, stronger foreign-exchange inflows, and higher reserves provide a more stable base as regional and global risks persist. The EBRD’s forecast of 5.0% growth in 2027 suggests the recovery is expected to remain intact, although the outlook will continue to depend on external conditions, domestic reforms, and the pace of investment and economic activity.