Business Today Egypt looks back at 2024 to highlight the year’s top stories and most impactful events that have left a mark on Egypt’s economy.
Unsplash - Adeolu Eletu
This year has been a complicated year for the Egyptian economy, with another 12 months of geopolitical events, deepening trends, and policy changes contributing to a somewhat challenging economic landscape.
Despite ongoing challenges, there is cautious optimism for economic growth in the coming years.
Business Today Egypt looks back at 2024 to highlight the year’s top stories and most impactful events that have left a mark on Egypt’s economy.
Kickstarting the year was Egypt’s official entry into BRICS, opening up broad opportunities for enhancing business and trade collaboration including several agreements with member countries to trade using local currencies, with the aim of reducing the bloc’s reliance on the USD.
Trade between Egypt and BRICS countries surged to $30.2 billion during the first eight months of 2024, a 15% increase compared to $26.2 billion in the same period of 2023, according to recent data from the Central Agency for Public Mobilization and Statistics (CAPMAS).
One of the most significant events this year has been the record-breaking deal between Egypt and the UAE to develop Ras El Hekma.
Hailed by the government as a “model for future investment partnerships that can bring substantial revenues,” the $35 billion agreement is considered the biggest single foreign direct investment (FDI) in the country’s history.
Directed towards the development of 170 million square meters in Ras El-Hekma on Egypt's Mediterranean coast, Egypt’s agreement with ADQ, an Abu Dhabi-based sovereign wealth fund, included a $24 billion injection of new funds, accounting for about 6.3% of Egypt's GDP, according to Fitch Ratings. It also comprised of the conversion of $11 billion in CBE deposits for financing new projects in Egypt.
The deal eased some of Egypt's foreign currency liabilities as it dealt with a foreign currency shortage, and set the stage for a new agreement with the International Monetary Fund (IMF) as it gave officials a buffer to devalue the currency by nearly 40% against the US dollar, a key requirement of the IMF’s EFF to the North African country.
The agreement also bolstered investor confidence, both within the UAE and abroad, renewing interest in the Egyptian business landscape.
Primarily driven by the implementation of the Ras El Hekma agreement, FY2023/2024 saw a remarkable increase in FDIs, with Egypt reaching a historic net inflow of $46.1 billion, compared to $10 billion in the previous fiscal year, according to the Central Bank of Egypt (CBE).
In March, the Egyptian Pound saw its latest devaluation as the CBE officially let the currency float according to market demand, leading the EGP to fall around 60% in a single day to just over EGP 50 vs 1 USD.
Within hours of the float, IMF’s representative to Egypt Ivanna Vladkova Holla announced that an agreement had been reached to increase Egypt’s $3 billion Extended Fund Facility (EFF) to $8 billion. A flexible exchange rate regime was a precondition for the loan.
“The aim is to raise foreign currency reserves, lower the debt burden, guarantee the flow of foreign direct investments and work towards high growth rates for the Egyptian economy,” Prime Minister Mostafa Madbouly explained at the time.
The IMF’s adjustment of the 2022 agreement helped bolster Egypt’s foreign reserves at a time it struggled with a severe FX shortage that caused tightened monetary policies, restrictions, and soaring inflation and prices.
By November 2024, Egypt received $1.64 billion from the $8 billion loan since the agreement’s approval in 2022, with a 4th review initially approved in late December. Once approved by the IMF board, the latest disbursement could mean a tranche of around $1.2 billion.
According to the latest data, Egypt’s net foreign reserves rose to $47 billion by November, up from $35.3 billion in February.
In June, President Abdel Fattah El-Sisi tasked Madbouly to form a new government. The reshuffled government, consisting of 30 ministers, is set to address the country’s major economic challenges.
Leading up to the official announcement, media outlets speculated about potential changes, eagerly awaiting news on which ministers would remain in their positions.
Along with fresh faces, and some ministry switches, the reshuffle saw the consolidation and reorganization of ministries, aiming to streamline governance and improve efficiency.
Among the returning ministers was Rania Al Mashat, who assumed an expanded role, overseeing both the Ministry of Planning and Economic Development and the Ministry of International Cooperation. She now leads the newly merged ministries as the Minister of Planning, Economic Development, and International Cooperation.
Another key figure, Kamel Al Wazir, took on additional responsibilities by overseeing the Ministry of Transport alongside some functions of the Ministry of Industry, becoming Minister of Industry and Transport and Deputy Prime Minister for Industrial Affairs.
In a significant move, the Ministry of Investment and Foreign Trade was reinstated after being dissolved in 2018, with Madbouly appointing Hassan El-Khatib as its new minister. The revived ministry assumed responsibility for various sectors related to foreign trade and exports, including agencies such as the Commercial Representation Authority, the Trade Agreements Sector, the Exhibition Authority, and the Export Development Fund, among others.
Additionally, Ahmed Kouchouk was appointed as the new Minister of Finance, replacing Mohamed Maait, who had held the position since 2018. Kouchouk, who had served as the Vice Minister of Finance for Fiscal Policies and Institutional Reforms for over eight years, played a crucial role in the negotiations with the IMF during his tenure, and continued to do so during the last 6 months of 2024.
As with the end of every year, and every fiscal year, hope for a stronger economy and expectations for GDP growth are at the forefront of governments and major business leaders. So, how does it look?
Egypt's government economic policies have started to show positive results, with the country's GDP growth projected to reach an average of 4% for the full fiscal year, potentially peaking at 4.8% in the fourth quarter, according to a December 31 statement by Minister Rania Al Mashat.
The IMF, in its latest Regional Economic Outlook report released in October, projected Egypt’s GDP to grow from an estimated 4.1% in FY2024 to 4.1% in FY 2025, with medium-term growth potentially exceeding 5%.
Fitch has revised its growth forecast upward, now anticipating a 5.1% rebound for Egypt’s economy in FY2025/2026, up from an earlier projection of 4.7%.
The World Bank, in its semi-annual MENA Economic Update, estimates that Egypt's economic growth will increase to 3.5% in FY2025/2026, despite ongoing economic challenges in the region.
The EBRD’s Regional Economic Prospects, released in September, forecast a GDP growth of 2.7% for FY2024/2025, followed by a 4% growth in FY2025/2026. This is a 0.3% downward revision for FY2024/2025 compared to previous projections, though the FY2025/2026 forecast remains unchanged. On a calendar-year basis, Egypt's economy is expected to grow by 3.2% in 2024, with an optimistic rise to 4.5% in 2025.
In its latest emerging markets report, Moody’s raised Egypt's growth projection for the FY2025/2026, forecasting a 5% expansion. However, it has downgraded its projection for the current fiscal year, reducing its growth estimate to just 4%.
Despite these challenges, including geopolitical conflicts, a decline in hard currency, and falling Suez Canal revenues, the Egyptian government remains confident in the economy's recovery.
