Egypt's economy grows by 3.5% in the first quarter of 2024/2025 due to economic reforms
Egypt’s economy grows by 3.5% in the first quarter of 2024/2025 due to economic reforms
Egypt’s economy grew by 3.5% in the first quarter of the 2024/2025 fiscal year, compared to 2.7% during the same time last year. The Ministry of Planning and Economic Development said this growth was due to government reforms and improvements in important sectors like manufacturing.
Sector Growth
Egypt’s industrial production (excluding oil refining) grew by 6% on average in the first quarter, compared to a 7.7% decline during the same time last year. This growth was helped by new policies, such as making it easier to clear goods at ports, which provided more raw materials for factories.
Other sectors also performed well. Technology and communication grew by 12.2%, and tourism, including restaurants and hotels, increased by 8.2%.
Transportation and storage grew by 15.6%, electricity production rose by 7.4%, agriculture grew by 2.65%, and social services like health and education increased by 4.5%.
However, oil and gas production dropped by 8.9%. The government expects this sector to recover soon, thanks to plans to pay off debts to foreign partners, increase foreign currency reserves, and start new drilling projects.
Suez Canal Problems
The Suez Canal, an important route for global trade, has faced a big drop in activity. Revenue fell by 68.4% in the first quarter because of political conflicts in the region. Less traffic through the canal has also reduced Egypt’s earnings from foreign currency.
The situation got worse due to repeated attacks on ships connected to Israel, the US, and the UK by Houthi forces, especially near the Bab el-Mandeb Strait, a key passage.
A statement from Egypt’s president last week revealed that the canal’s revenue for the 2023/2024 fiscal year, which ended on June 30, fell by 23.4%, bringing in $7.2 billion. This drop resulted in a loss of nearly $7 billion in expected income.
Private Sector Investments
Investments by Egypt’s private sector grew by 30%, reaching $2.6 billion (EGP 133.1 billion) in constant prices, up from $2 billion (EGP 102.3 billion) during the same time last year. Meanwhile, public sector investments dropped by 60.5%, falling to $1.1 billion (EGP 57 billion) from $2.8 billion (EGP 144.4 billion) in the first quarter of the 2023/2024 fiscal year.
This decrease is due to the government tightening control over public spending and working to boost private sector activity.
Economic Indicators
Egypt’s Purchasing Managers’ Index (PMI) slightly increased to 49.2 in November 2024, compared to 49 in October. Although still below the neutral level of 50, the consistent improvement over the past three months and higher export orders suggest recovery in the country’s export sector.
Looking Ahead
The Ministry of Planning expects Egypt’s economy to grow by 4% in the 2024/2025 fiscal year, supported by reforms and initiatives to promote private sector growth.
Published: 1st January 2025
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