Arab Finance: Experts and economists expected an increase Economic growth rate in Egypt During the next year 2025, it will reach 4.5%, due to several reasons, namely attracting more investments in several sectors, most notably the industrial sector.
According to a report by the Ministry of Planning, Economic Development and International Cooperation, the Egyptian economy’s gross domestic product recorded a growth rate of 3.5% during the first quarter of the fiscal year 2024/2025, compared to a rate of 2.7% in the corresponding quarter of the previous fiscal year. This growth is due to the reform policies taken by the government with the aim of restoring macroeconomic stability and strengthening the governance of public investments, as well as to the noticeable improvement in some major economic activities, especially the manufacturing industry, despite the continued decline in Suez Canal activity against the backdrop of geopolitical tensions in the region.
These results have reinforced the periodic indicators indicating positive signs of improved economic activity, as the industrial production index (excluding oil refining) recorded a positive growth of 6% on average during the first quarter of the fiscal year 2024/2025, compared to a contraction rate of 7.7% in the corresponding quarter. In the previous fiscal year, as well as the relative improvement in the general purchasing managers index, especially the export sub-index, which indicates a continued increase in new export order flows for seven months in a row, which is a positive indicator of recovery. Export activity, in addition to the rise in the business barometer index issued by the Egyptian Center for Economic Studies to 51 points as a result of the improvement of most indicators, especially production, sales, exports, and utilization of production capacity.
Expectations of an increase in the growth rate in Egypt during the next year
For his part, Dr. Engineer Samir Sabry Amin, Rapporteur of the Private Investment Committee (domestic and foreign) at the National Dialogue, said in exclusive statements to Arab Finance that he expects the growth rate of the Egyptian economy at the end of 2024 to be 4% and to continue increasing during 2025 to 4.5%.
Amin stressed that the expected increase in the growth of the Egyptian economy is due to several reasons despite the geopolitical tensions in the region, and that the most important of these reasons that will push the Egyptian economy towards growth are the investments directed to several sectors, including the construction and infrastructure sector, especially roads and the expansion of agricultural reclamation, as well as focusing on establishing… Ports on both the Red Sea and the Mediterranean, further linking Egypt to global supply chains.
Amin explained that the most promising sectors that will drive economic growth in Egypt during the year 2025 is the industrial sector, especially the manufacturing industry, as Egypt is witnessing during the last and current stage a huge development in legislative construction and facilitating procedures for obtaining lands for industrial purposes through the General Authority for Industrial Development, which is concerned with providing lands. Issuing licenses and obtaining these lands from the Authority at prices suitable for investors and industrialists compared to the past, indicating that the industrial sector currently contributes up to 16% and we hope that this percentage will reach 20% of the contribution to the gross domestic product.
Promising sectors in the Egyptian economy
Amin pointed out that the most promising sectors that will also contribute to economic growth are the mining sector, the agriculture sector, the export of agricultural crops, reaching large proportions of self-sufficiency for many agricultural crops, and reducing the wheat import bill through expanding wheat cultivation with new agricultural projects, especially projects. Egypt's Future Agency for Sustainable Development, which aims to increase the quantities of wheat grown from 2 to 3 million tons next year, as an increase from the current quantities.
The Secretary-Rapporteur of the Private Investment Committee (domestic and foreign) in the national dialogue recommended opening more room for the private sector, with the state moving towards making room for the private sector, and implementing the state ownership policy document by exiting from several sectors in which the government operates to give the private sector the opportunity to invest, stressing that The necessity of supporting exports, and focusing with all competent authorities under the auspices of the Ministry of Investment and Foreign Trade on the issue of exporters and opening new markets for Egyptian products, as well as contributing to facilitating customs procedures, whether for exports or imports, which will contribute greatly to Egypt's entry into new markets, whether on the African continent or Europe, as well as increasing exports to the United States of America, especially with the new American administration.
Amin explained that the tensions in the region and surrounding the Egyptian state represent a very big challenge, but at the same time they represent opportunities because Egypt is currently considered the politically stable country in the region. Egypt also has manpower that can contribute to the reconstruction of the region, which contributes to the stability of neighboring countries.
The importance of the agricultural and industrial sectors
While Dr. Sherif Muhammad Ali, Professor of Economics and Public Finance and Vice President of Sadat City University, points out that economic growth in Egypt depends on two important sectors, namely the industrial sector and the agricultural sector, both of which have factors that contribute to its development. In the agricultural sector, attention must be paid to the horizontal and vertical expansion of agricultural production. By increasing the productivity of acres, improving breeds, and expanding the agricultural area, which contributes to increasing production and then the possibility of increasing exports abroad, which increases foreign cash flows to the country and limits imports.
Ali explained that the per capita share of agricultural land is still decreasing and weak and must be increased, as the per capita share of agricultural land in Egypt is only two karats (an acre is 24 karats), while the global average reaches more than 12 karats, which ultimately reflects on food security. where .
Ali explained that the next sector, which is considered a locomotive for development, is the industrial sector, which must receive support from the state to increase industrial production and contribute to exports abroad, especially manufacturing industries, as Egypt suffers from a deficit in the balance of payments, and therefore increasing exports in the industrial sector will contribute to Reducing the balance of payments deficit, pointing out that Egypt also suffers from the weak productivity of the Egyptian worker compared to, for example, Japanese or German work, as we have what is known as disguised unemployment in government agencies and government factories, and therefore there must be policies that push towards stimulating worker productivity.
Ali stressed the need to confront inflation by increasing the supply of goods and products and controlling prices from both government agencies and civil society associations such as consumer protection associations, which contributes to reducing inflation and rising prices.
Expectations of international institutions for the growth rate
And he expected International Monetary FundThe Egyptian economy will record a growth rate of 4.2% of GDP during the current fiscal year, which ends in June 2025, thanks to the reform measures implemented by the government, and will grow to 5% in the medium term.
The International Monetary Fund report linked the acceleration of Egypt's economic growth to 5% in the medium term to predictions of calm conditions in the region and a decline in disturbances in the Red Sea during the first half of 2025.
The International Monetary Fund is working to finance the economic reform program with an $8 billion loan that expires in September 2026.
While Fitch Credit Rating Agency expected Egypt's GDP growth to rise to 3.7% in fiscal year 2025 thanks to enhanced confidence, remittances from Egyptians working abroad, and foreign direct investment.
Standard & Poor's expected the Egyptian economy to recover to 4.2% in the period from 2025-2027, driven by adjusting the exchange rate and easing interest rates.
She stressed that Egypt's resources from tourism, remittances from Egyptians working abroad, and direct investment will be factors for improving the Egyptian economy.
The European Bank for Reconstruction raised its forecast for Egypt's economic growth on a calendar-year basis – January to December – during the next year 2025 by 0.1% to 4.5% from 4.4%, according to the report.
The World Bank's view was less optimistic than previous institutions about the growth of Egypt's economy due to geopolitical tensions in the region and the decline in Suez Canal revenues.
The World Bank reduced its expectations for the Egyptian economy’s GDP growth rate to 3.5% during the current fiscal year from 4.2% in previous expectations.
The main sectors of the Egyptian economy
For his part, Prime Minister Dr. Mostafa Madbouly affirmed the state’s ability to maintain stability, safety and security, and to try as much as possible to continue achieving growth rates for the Egyptian economy.
He said during his recent meeting with a number of investors that “despite the various difficult circumstances, the Egyptian economy was growing positively,” indicating that the growth rates during the past two years were not as hoped and targeted, but the state’s vision and continued implementation of various special procedures and steps Economic reform gives more hope for achieving targeted growth rates that exceed 4%, and then reaching rates of 6 and 7%.
The Prime Minister added that the coming period requires us to move more quickly in various files, and to empower the private sector more, pointing out that the state, although it is interested in the arrival of the private sector from abroad and attracting foreign investments, has very great confidence in the national private sector, Which supports its efforts, and is keen to be the largest, largest and most capable of expansion and investment within Egypt, as it is the basis for the development process.
The Prime Minister stressed that the Egyptian state’s plan, in accordance with Vision 2030, consists of 4 main sectors: industry, agriculture, communications and information technology, and tourism, as agriculture represents a priority for the state and one of the elements of its strength, and the state is keen to support many agricultural reclamation projects. In the New Delta, Sinai, Toshka, and East Owainat, over the next two years, these projects will have a positive impact.
External shocks negatively affected the performance of some major economic activities
For her part, Dr. Rania Al-Mashat, Minister of Planning, Economic Development and International Cooperation, said that estimates of the economic growth rate in 2023/2024 are 4.1%, while the year ended with a slowdown in the real GDP growth rate in Egypt to 2.4% in 2023/ 2024, while continuing to decline compared to an achieved growth rate of 3.8% in the year 2023/22 and 6.6% in the year 2022/21.
The Minister added that external shocks and economic and geopolitical challenges had a negative impact on the performance of some major economic activities, most notably the Suez Canal, the extraction and petroleum sector, and manufacturing industries, as well as the state’s adoption of contractionary monetary and financial policies with the aim of restoring macroeconomic stability and governance of public investments.
Al-Mashat stressed that this period is witnessing unprecedented turmoil and economic and geopolitical challenges that have repercussions on all economies of the world without exception, as their repercussions extended to affect various aspects of the Egyptian economy, including, of course, the indicators achieved and the implementations of the economic and social development plan.
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