RIYADH: The Central Bank of Egypt has raised its economic growth forecast to 5.1 percent for the 2025/26 fiscal year and 5.5 percent for 2026/27, up from previous projections of 4.8 percent and 5.1 percent, respectively.

The improved projection is attributed to the anticipated increase in contributions from the non-oil manufacturing and services sectors, with expectations of accelerated growth supported by the continuation of the monetary easing cycle.

This is expected to support real growth in credit extended to the private sector in the coming period, therefore boosting economic activity, according to a statement.

The revised forecast follows Egypt’s 5.3 percent gross domestic product growth in the first quarter of 2025/26, the strongest expansion in more than three years, according to the Minister of Planning and Economic Development Rania Al-Mashat in November.

At the time, Al-Mashat underlined that this acceleration was driven by improvements in productive sectors.

This also supports ministry data released in September showing that the economy expanded 4.4 percent in fiscal year 2024/25, supported by a strong fourth quarter when growth reached a three-year high of 5 percent.

The newly released report from Egypt’s central bank said: “Furthermore, forecasts are further strengthened by an anticipated stronger performance in the extractive sector, underpinned by multiple successful onshore and offshore discoveries of crude oil and natural gas, which are expected to gradually increase domestic production.”

It added: “Additionally, the growth outlook is further reinforced by a projected rebound in Suez Canal activity during the current fiscal year, assuming the normalization of maritime traffic in the Red Sea in light of the recent peace deal in Gaza, which has restored confidence and prompted the return of shipping lines through the Canal, including Maersk and CMA CGM.”

The report said continued strength in manufacturing, services, and Suez Canal activity is likely to support real GDP growth throughout the forecast horizon.

As for inflation, the analysis indicated that annual headline inflation is expected to keep slowing down throughout 2026, although it will remain slightly higher than the original forecast, before returning to the target level by the fourth quarter of 2026.

“As such, annual headline inflation is expected to average 12.5 and 9.0 percent in fiscal years 2025/26 and 2026/27, respectively,” the report said.