Egypt's Economy Grows at Fastest Pace in Seven Quarters, Driven by Industry
Egypt's economy recorded its fastest growth in seven quarters, expanding by 4.3% in the second quarter of the 2024-2025 fiscal year, driven by a surge in manufacturing and tourism, according to a statement from the Ministry of Planning and Economic Development on Wednesday.
Despite a continued decline in Suez Canal activity, private sector investments showed improvement, contributing to the positive growth trend.
The non-oil manufacturing sector grew by 17.7% year-on-year between October and December 2024, marking its third consecutive quarter of positive growth.
This expansion was attributed to structural reforms aimed at boosting productivity and export-driven growth, according to the ministry's statement.
Egypt's industrial sector received a boost from customs clearance facilitation for raw materials and inputs, leading to an increase in the manufacturing index—excluding crude oil and petroleum products. Growth was particularly strong in automobile production, ready-made garments, beverages, and textiles.
'The government is pushing forward with its transition toward tradeable sectors like manufacturing, aiming for a more diverse and sustainable economy that enhances Egypt's ability to withstand global economic challenges,' said Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation.
Industrial expansion is a positive indicator for the government, which aims to attract $3.5 billion in new industrial investments in 2025, reflecting a 15% increase from the previous year, according to Yehia El-Watheq Bellah, head of the Egyptian Commercial Service.
Egypt's tourism sector played a significant role in foreign currency inflows, growing by 18% year-on-year in Q2. The number of tourists reached 4.41 million, with an increase in tourist nights. This momentum helped offset a 70% decline in Suez Canal revenues, caused by ongoing Red Sea disruptions.
In January, Yemen's Houthi rebels announced a halt to ship attacks following a Gaza ceasefire agreement. However, even before this, attacks had stopped for nearly a month, encouraging some shipping companies to return to the Red Sea route. However, recent threats from the Houthis have resurfaced after Israel blocked aid shipments to Gaza.
Oil and gas extraction contracted, with petroleum output declining 7.5% and natural gas production dropping 19.6%. However, the ministry expects future growth as new exploration investments take effect.
Private sector investments surged 35.4%, now accounting for more than 50% of total investments, reflecting Egypt's IMF-backed economic reform program.
-Public sector investments shrank by 25.7%, comprising less than 40% of total investments.
Egypt's latest economic performance highlights a shift toward private sector-driven growth, with industrial expansion and tourism playing crucial roles in stabilizing the economy despite global challenges.
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