Egypt’s economy is expected to gain momentum in 2026 as inflation pressures ease, foreign‑currency inflows improve and monetary policy continues to loosen, according to a report by investment bank EFG Holding.
The report, obtained by Egypttech, said 2026 will mark a “real turning point” for the economy after two years of efforts to contain a foreign‑currency liquidity crunch and restore a measure of financial and monetary stability.
EFG expects the Egyptian pound to weaken to an average of 48.04 to the U.S. dollar in 2026, before slipping further to 49 in 2027 under a more flexible exchange‑rate regime supported by stronger dollar inflows and calmer monetary conditions.
Tourism revenues are projected to rise to $18.7 billion by the end of 2026 and climb to $21.3 billion in 2027 as the sector’s strong recovery continues.
The report also forecasts aggressive monetary easing, with the Central Bank of Egypt expected to cut interest rates by 600 to 700 basis points in 2026, bringing key rates to around 15% by year‑end as inflation gradually declines.
Average inflation is expected to fall to between 8% and 10% by late 2026 — 4 to 6 percentage points lower than 2025 — creating room for further easing while maintaining positive real rates.
The Egyptian stock market is projected to grow 13% over the next two years, supported by stronger corporate earnings, a more stable exchange rate and lower financing costs.
Private‑sector credit is expected to expand by 25% across fiscal years 2025/2026 and 2026/2027, driven by lower nominal interest rates, improved business confidence and increased lending appetite among banks — factors that should support investment and overall economic activity.
However, the report cautioned that these improvements alone will not deliver a major growth surge without deeper structural reforms to strengthen the private sector and attract more foreign direct investment.
Egypt saw a second wave of “carry trade” inflows in 2025, reflected in higher foreign holdings of local debt instruments, which helped bolster foreign‑exchange reserves and ease pressure on the pound.
EFG expects monetary policy to continue shifting gradually toward easing in 2026 as inflation retreats from earlier peaks.
Further rate cuts are likely, the report said, though at a measured pace that balances growth support with maintaining the appeal of local debt to foreign investors.