Egypt’s economic outlook is facing significant challenges as the country grapples with high inflation rates projected to persist through 2024 and 2025.
According to recent reports, inflation has become the central issue affecting consumers and businesses alike, leading to increased costs of goods and services.
The Central Agency for Public Mobilization and Statistics (CAPMAS) revealed on February 3, 2025, the inflation rate stood at 27.1% for January 2025, reflecting financial pressures stemming from various factors, including the devaluation of the Egyptian pound and the global economic environment.
Economists are sounding warnings about the potential impact of inflation on the economy, stating it could hinder growth and disrupt social stability.
“Rising inflation is squeezing the most vulnerable segments of society, particularly those living on fixed incomes,” noted Ahmed Shawky, an economist, emphasizing the urgency for effective policies to mitigate this situation.
Inflation is expected to peak at around 30% during mid-2025 as commodity prices continue their upward trend globally. This is attributed to external factors like the supply chain issues and geopolitical tensions affecting mineral and energy markets.
On March 1, 2025, during the annual report issued by the Ministry of Finance, officials outlined the new economic strategies aimed at curbing inflation. Finance Minister Mohamed Maait asserted the government's commitment to "ensure economic stability and manage inflation through innovative supply chain solutions and enhancing local production capabilities.”
The projected inflation rates are part of broader economic concerns, with the World Bank and International Monetary Fund (IMF) advising the Egyptian government on effective monetary policies. Both institutions suggest broad reforms aimed at boosting local production and enhancing exports as methods to stabilize prices.
Parallel to inflation, the Egyptian pound continues to demonstrate weakness against major currencies, contributing to the inflationary pressures. A previous assessment indicated the currency lost approximately 50% of its value over the past three years, directly impacting the purchasing power of Egyptian households.
The government has implemented various subsidy programs aimed at alleviating the pressure on low-income families, though the long-term sustainability of these initiatives is under scrutiny. “While these programs are well-intentioned, we need to balance them against our fiscal realities,” argued economic researcher Fatima Hassan during her critique of the subsidy schemes.
Consumer confidence is low, with many expressing concerns about their financial situations moving forward. A recent survey conducted by the University of Cairo found over 65% of respondents worried about their ability to afford basic necessities amid soaring prices.
The Federation of Egyptian Industries has urged the government to adopt more business-friendly policies, advocating for tax reforms to stimulate investment and improve competition within the Egyptian market, thereby generating job opportunities and increasing economic resilience.
Yet, structural issues within key sectors like agriculture and manufacturing need urgent attention. Increased investment is seen as necessary to modernize these sectors, which currently lag as they grapple with outdated practices and insufficient technology.
Looking forward, analysts suggest the government needs to harmonize its inflation control measures with growth policies aimed at enhancing the overall economic environment for both consumers and businesses.
The Central Bank of Egypt has hinted at potential adjustments to interest rates as one measure to tackle inflation. “Higher interest rates could help control inflation, but they risk stifling economic growth — it’s all about finding the right balance,” said Mohamed El-Erian, chief economic advisor.
Egypt’s path forward will likely necessitate difficult choices, balancing immediate relief for inflation’s effects against necessary economic reforms for sustainable growth. The hope remains for recovery, with collaboration between the government, private sector, and international bodies set as the foundation for rebuilding the economy through effective, integrated approaches.
“Stabilizing inflation rates will require concerted efforts — both domestically and internationally — and the onus is on policymakers to rise to the occasion,” noted economist Shawky. “The future of Egypt’s economy may very well depend on these strategic decisions.”