Egypt Daily News – The Egyptian economy faces significant challenges due to geopolitical tensions in the Middle East, particularly impacting revenues from the Suez Canal.
This has led the World Bank to downgrade its growth forecast for Egypt’s economy for the fiscal year to 3.5%, down from previous predictions. The estimate reflects concerns over declining revenues from the Suez Canal, anticipated to drop from $8.8 billion in the last fiscal year to approximately $4.8 billion this year.
This development follows similar reductions from the International Monetary Fund, which adjusted its forecast to 4.1%, a downward revision of 0.3%.
This marks the third occasion this year that the World Bank has amended its growth outlook for Egypt. Initial reductions began in January when the expected growth for 2024/2025 was set at 3.9%, briefly increasing to 4.2% before being revised back down to 4.1% in July.
Such adjustments have highlighted the ongoing struggles within the Egyptian economy, heavily reliant on Suez Canal revenues and affected by increasing risks in the Red Sea region.
Egyptian officials have been vocal about the challenges, with Prime Minister Mostafa Madbouly noting a significant loss in Suez Canal revenues, amounting to over 60% of expectations for the year, translating to a decrease of $550-600 million.
Additional economic concerns include rising interest rates, which create barriers for businesses seeking loans for expansion due to elevated borrowing costs.
Economists have pointed out other contributing factors to the economic downturn, including a ceiling imposed on public investments designed to empower the private sector, coupled with the rising value of the dollar against the pound, which heightens import costs.
However, there are also hopeful indicators, as recent investment deals and increases in remittances from overseas workers may prompt the World Bank to revise its forecasts positively in the future.
The Egyptian government is preparing for potential worsening conditions by adopting a “contingency economy,” which includes implementing a cap on public investments and launching incentives to stimulate private sector growth.
Despite the current environment, some experts have identified structural improvements in the economy and the resilience of remittances as potential stabilizing factors in these turbulent times.
Egyptians living abroad made an impressive figure for remittances . The $15.5 billion collected in the first seven months of the year highlights the importance of expatriate financial support to the Egyptian economy.
The $3 billion remitted in July alone sets a significant record and indicates strong economic ties and ongoing support from Egyptians living overseas.
Remittances often play a critical role in bolstering local economies, helping families cover essential expenses and contributing to national economic stability. If you have any further questions or need more information, feel free to ask!
