CBE Cuts Growth Forecast to 4.9% amid Regional Turmoil, Rising Global Prices

Egypt’s central bank (CBE) has lowered its economic growth forecast for the 2025/26 fiscal year to 4.9%, citing escalating regional tensions and their ripple effects on global markets, in a signal of mounting external pressures on the domestic economy.

In its latest monetary policy report, CBE revised down its earlier projection of 5.1% made in February, pointing to the economic fallout from ongoing geopolitical conflict in the region. The bank warned that the crisis is weighing on both regional and global economic activity, creating a more uncertain outlook for growth.

The central bank highlighted that global economic conditions remain highly unpredictable, with growth and inflation trajectories increasingly shaped by the scale and duration of geopolitical shocks. Disruptions linked to the conflict have strained international supply chains, complicating trade flows and increasing costs.

According to the report, the intensifying tensions have contributed to a broader slowdown in the global economy, as uncertainty dampens investment and restricts cross-border commerce.

A key concern flagged by policymakers is the renewed upward pressure on inflation, driven by rising energy and agricultural commodity prices. Supply chain disruptions, coupled with higher insurance premiums for international shipping, have pushed costs upward, reverberating across global markets and feeding into domestic price levels.

These developments pose a challenge for Egypt, which remains sensitive to imported inflation, particularly in food and fuel sectors.

In response to the evolving landscape, central banks worldwide, across both advanced and emerging economies, are adopting a more cautious stance. Many have opted to hold interest rates steady or slow the pace of monetary easing, reflecting the fragile balance between supporting growth and containing inflation.

Egypt’s central bank echoed this cautious tone, signaling that policy decisions will continue to be guided by external risks as well as domestic economic indicators.

The report also warned of potential declines in external demand if global trade continues to weaken. Such a scenario could negatively impact export-driven sectors and broader economic activity in emerging markets, including Egypt.

The downward revision in growth expectations underscores the challenges facing Egypt’s economic recovery. While the projected 4.9% expansion still reflects moderate growth, it signals a more constrained outlook shaped largely by forces beyond national control.