The World Bank has released a report projecting that Egypt's current account deficit will decrease to 4.2% of GDP in the current fiscal year, down from 4.7% in the previous year. This forecast is part of the bank's regional economic update for the Middle East, North Africa, Pakistan, and Afghanistan. The report also notes that Egypt's economy is expected to grow at a rate of 4.3% this fiscal year, an upgrade from the 4% growth predicted in April.
The World Bank's report highlights Egypt's economic resilience in the face of regional conflicts. The country's growth is expected to accelerate to 5.1% in 2025-2026, driven by its ability to withstand the impact of conflicts in the region. This growth will be supported by the country's diversified economy, which has been less affected by the decline in oil prices compared to oil-exporting countries.
The report also notes that oil-importing countries in the region, including Egypt, have been more resilient to economic shocks. These countries are expected to see their growth rates increase to 4.3% in 2026, up from 3.9% in 2025. In contrast, oil-exporting countries in the Gulf region are expected to see their economies contract by 4.3% on average in 2026, due to declining oil exports and lower government revenues.
The World Bank's report also highlights the impact of the conflict on the region's economy. The closure of the Strait of Hormuz has had a significant economic impact on oil-exporting countries in the Gulf region. The report notes that the conflict has had broader effects on the region, including on tourism, aviation, and logistics, as well as increased uncertainty in financial markets and businesses.
On a regional level, the World Bank expects the economy to contract by 2.1% in 2026, down from 3.3% growth in 2025. The report notes that inflationary pressures are rising in several economies, particularly due to higher food prices resulting from increased shipping costs and supply chain disruptions.
The World Bank also sees opportunities for long-term growth in the region, driven by the adoption of artificial intelligence. The report notes that between 13% and 20% of jobs in the region have the potential to benefit from AI, which could boost productivity. However, the report also highlights the need for structural reforms to address gaps in human capital, infrastructure, and private sector dynamism.
Key points
- Egypt's current account deficit is expected to decline to 4.2% of GDP this fiscal year.
- The country's economy is expected to grow at a rate of 4.3% this fiscal year, driven by its resilience amid regional conflicts.
- The World Bank sees opportunities for long-term growth in the region, driven by the adoption of artificial intelligence.
