Egypt - International and domestic financial institutions have revised upward their projections for several key Egyptian economic indicators in 2026, most notably the US dollar-Egyptian pound exchange rate, inflation, and economic growth.

The improved outlook reflects a simultaneous strengthening of multiple economic fundamentals, including robust foreign-currency inflows, easing geopolitical tensions across the region, and rising appetite for both direct and portfolio investment in the Egyptian market. Together, these factors have reinforced confidence in Egypt’s ability to maintain macroeconomic stability and attract additional capital in the coming period.

EGP forecasts revised higher

Investment banks have varied in their estimates for the Egyptian pound, but most have revised their projections upward by between 2% and 4%. The new expected trading range for 2026 now stands between EGP 45 and EGP 49 per dollar, compared with earlier forecasts of EGP 48 to EGP 51.

Standard Chartered raised its year-end forecast for the pound to EGP 49 per dollar, from EGP 51 previously. The bank expects the currency to stabilise around EGP 47.5 by the end of the first quarter, compared with its earlier estimate of EGP 49.

Fitch Solutions also revised its 2026 forecast, projecting the exchange rate to range between EGP 47 and EGP 49 per dollar, instead of its earlier estimate that placed the average level at EGP 49.

EFG Hermes expects the average USD-EGP rate to reach EGP 48.04 during the current fiscal year and rise to EGP 49 in the following fiscal year.

Meanwhile, Al Ahly Pharos projected that the average exchange rate could improve to around EGP 46 in 2026, potentially reaching EGP 45 by year-end.

The currency’s recent performance has supported this optimism. The Egyptian pound closed 2025 on a strong footing, appreciating by 6.7% against the dollar over the year.

Inflation seen on continued downward path

Financial institutions have also adopted a more optimistic view on inflation, expecting a continued gradual decline in 2026, supported by improved monetary conditions and easing price pressures on key commodities.

In its latest research, EFG Hermes projected average inflation to fall to between 8% and 10% by the end of 2026 – a decline of four to six percentage points compared with 2025 levels.

Both Al Ahly Pharos and CI Capital expect inflation to ease to around 11% in 2026. Their projections are underpinned by reduced price pressures, a stronger balance of payments position, a stable foreign-exchange market, and sustained dollar inflows from multiple sources.

Standard Chartered forecast inflation at 11% by June 2026, with the downward trend continuing throughout the year. The bank cited stable fiscal and monetary policies, alongside improved liquidity conditions, as key supportive factors.

Scope for continued monetary easing

S&P Global Market Intelligence expects Egypt to continue its monetary easing cycle in 2026 as inflationary pressures subside. However, it emphasised that the pace and magnitude of further interest-rate cuts will remain contingent on inflation developments and broader risk assessments.

In a recent report, the institution noted that the decision by the Central Bank of Egypt’s Monetary Policy Committee last week to cut key policy rates by 100 basis points reflects diminishing inflationary pressures, even though challenges persist in non-food components of the consumer price index.

According to S&P, the disinflation process remains constrained by ongoing price pressures in non-food categories and is still vulnerable to domestic and external risks. As a result, further monetary easing throughout 2026 is likely to proceed cautiously and in a data-dependent manner.

The agency stressed that future rate decisions will hinge on incoming inflation data, market expectations and the central bank’s assessment of the balance of risks. Over the medium term, monetary policy is expected to remain prudently calibrated to safeguard financial stability while supporting balanced and sustainable economic growth.

Broader growth momentum

Alongside exchange-rate and inflation improvements, growth expectations have also strengthened, supported by increased investment flows, improved external balances and stronger private-sector activity. The combined upward revisions to currency stability, inflation moderation and growth prospects suggest that 2026 could mark a year of greater macroeconomic coherence for Egypt – characterised by improved investor confidence, enhanced external resilience and a more supportive environment for sustainable expansion.

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