Analysts participating in a Reuters poll held between April 8 and April 23 trimmed their projections for Egypt's economic expansion this year and next, citing the Iran war and its effect on global energy prices as a central constraint. The median of responses from 12 economists put gross domestic product growth at 4.6% in the year to June, a repeat 4.6% in the subsequent year, and a rise to 5.5% in 2027/28.
Those projections represent a downward adjustment from a January survey undertaken before the conflict, when economists had expected growth of 4.9% on the view that reforms enacted under an International Monetary Fund programme two years earlier were delivering stronger-than-anticipated benefits.
"We expect energy prices to remain high in the coming quarters, even after the normalisation of flows through the Strait of Hormuz. It will fuel inflationary pressure in Egypt," said Pascal Devaux of BNP Paribas. "In this context, we expect a slowdown in activity in Egypt, but not a sharp drop."
Growth in Egypt had fallen to 2.4% in 2023/24 but rebounded after March 2024, when authorities sharply devalued the currency and raised interest rates under an $8 billion IMF support package. Still, uncertainty linked to the Iran conflict has prompted further downward revisions: the central bank this month cut its year-on-year GDP forecast for fiscal 2025/26 to 4.9% from a February prediction of 5.1%.
The IMF also reduced its outlook, lowering its projected growth for calendar 2026 to 4.2% from an earlier 4.7%. Poll respondents highlighted several channels through which the regional hostilities could dent Egypt's economy beyond higher energy costs — a potential slowdown in tourism, weaker remittance flows from Egyptians employed in the Gulf, and reduced Suez Canal toll revenues from shipping.
Inflation expectations were revised upward in the poll. Economists forecast average inflation of 13.5% in 2025/26, 12.00% in 2026/27 and 9.0% in 2027/28. By comparison, the previous poll recorded median inflation projections of 11.6%, 9.1% and 8.2% for those same periods.
"Inflation is already high and if the conflict in the Middle East continues, and oil prices remain elevated, this will sustain upward pressure on inflation," said Harry Chambers of Capital Economics. Official data from the state statistics agency CAPMAS showed annual urban consumer inflation accelerated to 15.2% in March from 13.4% in February.
Poll participants said the Iran war is likely to slow the central bank's move to ease its overnight policy rate, which began a year ago. The median forecast calls for the lending rate to stay at 20.00% by end-June, then to ease to 17.0% by end-June next year and to 13.25% by end-June 2028.
By contrast, economists in the January survey had expected a 200 basis point cut by January and a further 500 basis point reduction by June 2027. The central bank has already cut its benchmark rate five times in 2025 and once again in February for a cumulative reduction of 825 basis points.
Contributors to the poll also adjusted forecasts for the Egyptian pound. The median expectation is for a slight depreciation to 51.58 to the U.S. dollar by end-June 2026 from the current 51.06. Projections show the currency at 51.50 by end-June 2027 and 51.85 at the close of June 2028.
Context and implications
The poll captures a tightening of near-term expectations driven by an external shock — the Iran war — which participants see as raising energy costs and sustaining inflation. While forecasters still anticipate growth to pick up by 2027/28, the intervening period is marked by elevated price pressures and a more cautious monetary stance that could influence borrowing costs, investment decisions, tourism flows and external receipts tied to shipping and remittances.