meed-logo

line1 line2 line3
SIGN IN / REGISTER

Egypt’s economy gets its mojo back

14 February 2025

 

Egypt’s economy is in stronger fettle than for at least a couple of years, and there is a sense of optimism about how things will transpire in 2025, even as recent pronouncements from the White House about Gaza weigh on policymakers in Cairo.

In a manifestation of that upbeat economic sentiment, Egypt in January staged a return to the international debt capital market for the first time in two years, with a $2bn issuance that was five-times oversubscribed. That was a straw in the wind that foreign investors’ concerns over the economy are finally abating.

After a battering inflicted on Egypt’s economy last year, when economic growth slipped to 2.4%, reflective of a weak currency, surging inflation and tougher public spending restrictions, analysts see a recovery in play that will drive stronger GDP growth in the coming year.

One key contributor to this improvement is the recovery in Suez Canal receipts, which dropped by about three-quarters last year after the Houthi attacks on shipping in the Red Sea. That loss of $7bn in revenues shaved off more than a percentage point from Egypt’s overall GDP growth rate, noted Moody’s Investors Service.

Growth dynamics are now improving, even if events in the region remain in flux. According to Capital Economics, there was a rise in real GDP growth to 3.5% in Q3 2024, up from 2.4% in Q2 2024. The manufacturing, transport and storage, and finance sectors were the key drivers of that improvement.

Egyptian banks are feeling the positive impact. Credit growth is reviving, with bank lending to the non-government sector growing by 2.9% in October 2024 – the fastest pace in two years.

Operating conditions for Egyptian lenders will continue improve in 2025, according to Fitch Ratings, underpinned by a sharp fall in inflation, along with an expected broadly stable currency, improved investor confidence and healthy foreign currency liquidity conditions. This should also support lower interest rates as inflation declines.

Foreign capital injection

Douglas Winslow, senior director at Fitch Ratings, says the improvement in market sentiment follows a combination of factors and is also seen in the return of non-resident inflows totalling more than $10bn into the domestic debt market since early last year.

Egypt's external finances have benefitted from Gulf state interventions, notably the UAE sovereign wealth fund ADQ’s major foreign investment in the Mediterranean resort of Ras El-Hekma, which was announced in 2024.

That deal injected $24bn of new foreign currency into Egypt, the remaining $11bn converting existing UAE foreign currency deposits held at the Central Bank of Egypt (CBE).

Saudi Arabia’s Public Investment Fund has also committed to invest $5bn in Egypt’s economy. 

Such investments, eased by the weaker Egyptian pound – rendering assets more affordable – will also help to address Egypt’s dollar shortages, and assuage residual investor concerns about default risk. 

“The huge Ras El-Hekma investment was a very important factor in the turnaround, and Fitch projects further foreign direct investment (FDI) of $7bn a year above the pre-ADQ position. The lion’s share of that is GCC investment,” says Winslow.

The $24bn of fresh foreign currency puts Egypt in a better place to move to a more flexible exchange rate. 

The combination of these factors has enabled a rapid rebuilding of Egypt’s external coffers, which was the key risk facing near-term external financing. Fitch forecasts FDI to average $16.5bn across the fiscal year ending June 2025 and fiscal year 2026, with new investment from Saudi Arabia having an impact.

Alongside the Gulf support has come multilateral financing, including from Europe. Since March 2024, an $8bn IMF Extended Fund Facility and a €7.4bn ($7.64bn) three-year EU support package have been unlocked.

Together, these capital injections will also help cover Egypt’s current account deficit, which widened to 5.4% of GDP in 2024. Inflation is also headed in the right direction, after reaching a peak of 36% in February 2024. The expectation is that inflation will have more than halved by the end of financial year 2025-26.

Strong growth upside

Looking ahead, the more optimistic prognosis foresees GDP growth accelerating to 5% in the current fiscal year. Others are more circumspect, noting the recent recovery in Suez Canal receipts is very partial and that the government still needs to implement structural economic reform measures.

Fitch Rating’s forecast for GDP growth is 4% for fiscal year 2025. A pickup in growth is already detectable.

“Growth was 3.5% in Q1 of the current fiscal year and we expect it accelerates to just above 5% in fiscal year 2026, close to our assessment of the potential and rate of the Egyptian economy. That’s partly due to further falling inflation and a positive impact on real income,” says Winslow.

Despite these stronger macro metrics, the wider credit assessment is still constrained, due to relatively weak external finances. While the central bank can call upon larger foreign exchange reserves to support the currency, Capital Economics has warned that a return to a heavily managed exchange rate would worry investors and may also call into question IMF and Gulf willingness to provide further financing.

“The IMF programme does contain some wider structural reform measures to improve private sector competitiveness, but in our view, they're not particularly far-reaching, and we're not seeing really sizeable momentum in terms of delivering in this area,” Winslow says.

There is a need for measures to stimulate private sector growth and also to improve the competitiveness of the economy, support the trade balance and reduce the current deficit over the medium term. 

“A better track record of ongoing political commitment to curbing off-budget spending pressures would also help Egypt’s rating,” says Winslow.

As to the potential for regional events to upset things, Egypt's credit fundamentals are at least better insulated from further geopolitical stress.

This, in turn, should give comfort to commercial banks in Egypt. Fitch upgraded the long-term issuer default ratings of all rated banks in November 2024, following the upgrade of Egypt’s sovereign rating.

There are other things that will need to be seen for the Egyptian economy’s recovery to sustain itself over the long-term.

“From a credit perspective, the composition of growth is equally important,” says Winslow.

“What we’ve seen in the past is that very large government off-budget megaprojects have not just led to weaker public finances, they've also contributed to external financing stress. So, what's particularly important is that the recent steps to try and better monitor and contain these off-budget infrastructure projects continues.”

MEED’s March special report on Egypt also includes:

> GOVERNMENT: Egypt is in the eye of Trump’s Gaza storm
> POWER & WATER: Egypt’s utility projects keep pace
> CONSTRUCTION: Coastal city scheme is a boon to Egypt construction

READ THE FEBRUARY MEED BUSINESS REVIEW

Trump unleashes tech opportunities; Doha achieves diplomatic prowess and economic resilience; GCC water developers eye uptick in award activity in 2025.

Published on 1 February 2025 and distributed to senior decision-makers in the region and around the world, the February MEED Business Review includes:

> WATER & WASTEWATER: Water projects require innovation
https://image.digitalinsightresearch.in/uploads/NewsArticle/13385133/main.jpg
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Riyadh Expo sets November bid deadline for Souq construction

    29 October 2026

     

    Expo 2030 Riyadh Company (ERC), responsible for delivering the Expo 2030 Riyadh venue, has allowed contractors until 11 November to submit bids for a contract to deliver the Souq areas within the Expo site.

    The tender was floated on 30 July, with an initial submission deadline of 9 October.

    The Souq areas are divided into five distinct precincts, with a total development area of about 300,000 square metres (sq m).

    The scope includes the five precincts and their associated vertical elements, infrastructure and public realm works. 

    The precincts comprise:

    • Precinct 1 – The Icon: 41,417 sq m
    • Precinct 2 – Place & Planet: 62,306 sq m 
    • Precinct 3 – Culture of Wisdom: 67,112 sq m  
    • Precinct 4 – Kingdom of Saudi Arabia: 45,967 sq m  
    • Precinct 5 – Adaptation & Innovation: 82,358 sq m

    The package will interface with three public parks. It will also tie into the Natural Corridor, including bridges.

    The Souq areas will form a mixed-use destination at the centre of Expo 2030 Riyadh, connecting the site’s iconic and thematic assets.

    The development will include rented and partnership pavilions, alongside a range of food and beverage, retail and visitor-experience offerings.

    Site progress

    Construction activity at the Expo site is accelerating, with Riyadh moving to award its first major vertical contracts and advancing infrastructure works across the programme.

    Earlier this month, Saudi Arabia’s Royal Commission for Riyadh City awarded a design-and-build contract to build a new metro station serving the Expo 2030 site.

    In April, ERC awarded two contracts to local firm Al-Yamama Company for the next phase of infrastructure works at the site.

    The scope covered the construction of road networks and infrastructure for water, sewage, electricity, telecommunications and electric vehicle charging.

    These awards followed ERC’s January award of an estimated SR1bn ($267m) contract for initial infrastructure works at the site to local firm Nesma & Partners.

    That scope covered about 50 kilometres of integrated infrastructure networks, including internal roads and essential utilities such as water, sewage, electrical and communications systems, and electric vehicle charging stations.

    The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event. Situated to the north of the Saudi capital, the site will be located near the future King Salman International airport and will provide direct access to landmarks within Riyadh.

    The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched ERC – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20998514/main.jpg
    Yasir Iqbal
  • Iraq oilfield water scheme to hit milestone next year

    29 October 2026

     

    China Petroleum Pipeline Engineering (CPP) expects to start laying pipeline for Iraq’s Common Seawater Supply Project (CSSP) in Basra in mid- or late next year, according to industry sources.

    The project is behind schedule, partly because importing sections of pipeline is proving challenging due to disruptions to shipping through the Strait of Hormuz.

    The project is being managed by state-owned Basra Oil Company (BOC), with Australia’s ILF acting as a project management consultant after completing the front-end engineering design (feed).

    Under current plans, the pipelines will be buried, which is expected to make them more secure than if they were installed on the surface.

    Phased development

    The client for the first phase of the CSSP is France’s TotalEnergies in partnership with QatarEnergy and BOC.

    The first phase is split into two packages currently under execution and will ultimately have the capacity to transport 5 million barrels a day (b/d) of water.

    The first package focuses on developing pipelines, and the second on developing a water treatment facility.

    CPP is executing the pipeline package contract.

    It signed a $2.5bn contract with BOC for the package in September last year.

    Also in September 2025, South Korea’s Hyundai announced that it had signed a contract worth 4.39tn won ($3.16bn) for the processing plant package.

    In September this year, MEED reported that early groundworks had started for both packages of the first phase of the CSSP.

    Phase one of the project is scheduled to start up in late 2028 or early 2029.

    Earlier this month, US-headquartered Exxon Mobil signed a memorandum of understanding related to the project’s second phase, which is expected to add 2.5 million b/d of water capacity.

    The CSSP will inject processed water into several of Iraq’s biggest oil fields. These include Rumaila, Zubair, West Qurna 1, West Qurna 2 and Majnoon. Water from the project will also be used in the Maysan and Dhi Qar fields.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20981033/main.jpg
    Wil Crisp
  • Dubai tenders Al-Awir sewerage and stormwater works

    29 October 2026

     

    Dubai Municipality has invited contractors to bid for a contract to build sewerage and stormwater infrastructure in New Al-Awir 1st.

    The project (DS317-C1) comprises about 95 kilometres of sewerage gravity network, excluding house connections, and about 105km of stormwater pipelines. The scope also includes house connection pipes, a stormwater pond and oil interceptors.

    According to tender documents seen by MEED, the tender was issued on 23 October, with a bid submission deadline of 12 November.

    The project comes amid wider residential and infrastructure development in Al-Awir 1. In January 2025, Dubai’s Roads & Transport Authority (RTA) announced plans to build 16.5km of internal roads in the area, including a new entrance from Emirates Road.

    In February 2025, MEED exclusively reported that the RTA had selected a local firm to undertake the road construction works.

    The Mohammed Bin Rashid Housing Establishment has also reported progress on housing projects in Al-Awir as part of a wider programme to develop residential communities across Dubai.

    The sewerage and stormwater project is relatively large compared with recent stormwater tenders, with the total cost estimated at up to AED1bn ($272m).

    The works will include approximately 69.2km of house connection pipes and 4,630 inspection chambers. The sewerage network will also include about 1,511 manholes, while the stormwater network will comprise approximately 1,247 manholes.

    Contractors will also be required to use no-dig construction methods for sections of the pipeline. The scope includes ground investigations, utility protection and traffic management.

    The bill of quantities specifies a stormwater pond with a composite volume of approximately 1.2 million cubic metres.

    Earlier this week, Dubai Municipality confirmed it had awarded contracts worth AED3bn ($817m) to expand the emirate’s stormwater drainage network by about 100 square kilometres under phase three of the Tasreef programme.

    The projects are part of Dubai’s AED30bn Tasreef programme and will cover Jumeirah, Umm Suqeim, Al-Quoz, Al-Barsha, Al-Wasl and Al-Marmoom. 

    The overall programme aims to increase the emirate’s stormwater drainage capacity by 700% and reduce costs associated with pumping stations, network operations and maintenance by 20%.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20977734/main.jpg
    Mark Dowdall
  • Contractors bid for QatarEnergy’s North Field West topsides

    28 October 2026

     

    QatarEnergy has received technical bids from contractors for a key tender covering the engineering, procurement, construction and installation (EPCI) of large platforms for the North Field gas field in Qatari waters.

    Contractors submitted their technical bids by the 26 October deadline, according to sources.

    Commercial bids are currently due on 10 November.

    The following contractors, among others, are understood to be bidding for the North Field West (NFW) production deck modules (PDMs) tender:

    • China Offshore Oil Engineering Company (China)
    • Larsen & Toubro Energy Hydrocarbon (India)
    • McDermott (US)
    • Saipem (Italy)

    The core scope comprises the EPCI of four PDMs and associated structures. The modules will increase gas production from North Field reservoirs and supply additional gas feedstock to the NFW liquefied natural gas (LNG) development.

    Issued earlier this year, the tender forms part of the wider NFW project, the third and final phase of QatarEnergy’s North Field LNG expansion programme.

    The technical-bid deadline has been extended several times, from 30 August to 15 September, 28 September, 12 October and 19 October. Commercial bids were previously due on 25 October, as MEED reported.

    Before issuing the PDMs tender, QatarEnergy awarded US firm McDermott an EPCI contract for four offshore jackets to support gas feedstock supply for the NFW LNG project. The contract is estimated to be worth about $200m, MEED reported in January.

    North Field LNG expansion

    QatarEnergy is advancing the three phases of its estimated $40bn North Field LNG expansion project. EPC works on all three projects are progressing.

    QatarEnergy is understood to have committed nearly $30bn to the first two phases – North Field East (NFE) and North Field South (NFS) – which will lift Qatar’s LNG production capacity from 77.5 million tonnes a year (t/y) to 126 million t/y by 2028.

    QatarEnergy awarded the main EPC contracts for NFE in 2021. The project was intended to raise LNG output to 110 million t/y by 2025. The $13bn EPC package – covering the EPCI of four LNG trains, each with a capacity of 8 million t/y – was awarded in February 2021 to a consortium of Japan’s Chiyoda and France’s Technip Energies.

    In May 2023, QatarEnergy awarded the $10bn main EPC contract for NFS to a consortium of Technip Energies and Consolidated Contractors Company (CCC). The contract includes two LNG trains, each with a capacity of 7.8 million t/y.

    Once fully operational, the first two phases are expected to add 48 million t/y of LNG supply to the global market.

    QatarEnergy took the final investment decision on NFW earlier this year, awarding an EPC contract estimated at $8bn to a joint venture comprising Technip Energies, CCC and Gulf Asia Contracting in February.

    Chiyoda carried out the front-end engineering and design work for the NFW LNG project.

    The NFW scope covers the EPC of two LNG trains with a combined capacity of 16 million t/y, as well as associated facilities for gas treatment, natural gas liquids recovery and helium extraction.

    In addition to LNG, NFW is expected to produce about 175,000 barrels of oil equivalent a day of condensate, ethane and liquefied petroleum gas.

    With all three phases under EPC execution – and NFE scheduled for commissioning later this year – QatarEnergy is positioning itself to remain one of the world’s largest LNG suppliers in the long term.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20973187/main.jpg
    Indrajit Sen
  • US military approaches contractors for Qatar air base project

    28 October 2026

     

    The US Army Corps of Engineers (USACE) has begun market engagement for an anticipated contract to design and build a Space Campus at Al-Udeid Air Base in Qatar.

    USACE’s Southwestern Division, Middle East District, has issued a sources-sought notice to identify contractors capable of delivering an integrated design-and-construction (IDaC) contract.

    The successful contractor will provide pre-construction services and build secure facilities that comply with Intelligence Community Directive 705 (ICD 705) standards.

    Interested firms must submit capability statements by 30 October.

    The construction market engagement follows USACE’s procurement of architect-engineer services for the development. The authority intends to award a single-award, task-order contract covering planning, design, site investigations and construction-phase support. The contract will have a five-year base period, with a two-year option, and a capacity of up to $100m.

    USACE expects to award the design contract in April 2028, alongside an IDaC construction contract following completion of the planning activities.

    The Space Campus is being developed to meet an operational requirement of the US Air Force and forms part of the Al-Udeid Air Base 2040 Strategic Master Plan.

    It will include a secure administrative headquarters, coalition operations centre, secure warehouse, conference centre, storage facilities, access-control and guardhouse complex, antenna yards, shelters and multiple unit buildings.

    The scope also includes secure perimeter fencing, intrusion-detection and closed-circuit television systems, roads, parking, site preparation, utility networks, substations, generators, chilled-water systems, fuelling facilities, and secure and unclassified communications networks.

    The project will require hardened and potentially underground structures. Contractors are expected to demonstrate expertise in managing saline groundwater, dewatering, underground waterproofing and Qatar’s geotechnical conditions.

    The latest procurement activity comes as Qatar’s Public Works Authority, Ashghal, tenders a contract for roads and associated infrastructure serving Al-Udeid Air Base.

    The project in Zone 95 of Al-Wakra Municipality includes a dual-lane carriageway, three roundabouts, electrical substations, drainage, lighting, intelligent transport systems and utility works.

    The road will link Al-Majd Road to the east with Street 203 in Zone 95 to the west.

    According to GlobalData’s Qatar Defence Market 2026-2031 report, Qatar allocated an estimated $17bn to defence in 2026, representing a compound annual growth rate (CAGR) of 2.5% between 2022 and 2026.

    The defence budget is projected to grow at a CAGR of 3.8% over the 2027-31 forecast period, reaching an estimated $20.8bn in 2031.

    Defence diplomacy is also a key factor in military procurement, with Doha strengthening bilateral ties through acquisitions from the US, France and Turkiye.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/20971169/main.jpg
    Yasir Iqbal