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The deficit is expected to narrow to 3.8 per cent in the 2025-26 fiscal year as canal revenues rebound, reflecting expectations of resolving regional conflicts and Red Sea disruptions by then.
Fitch Solutions has forecasted that Egypt’s current account deficit will decrease from 6.8 per cent of GDP in the previous fiscal year to 4.8 per cent in the current fiscal year, driven by a robust recovery in remittances from Egyptians abroad.
Despite this improvement, the report noted a widening trade deficit and reduced Suez Canal revenues. The deficit is expected to narrow to 3.8 per cent in the 2025-26 fiscal year as canal revenues rebound, reflecting expectations of resolving regional conflicts and Red Sea disruptions by then.
According to Fitch Solutions, remittance growth will continue to support the current account in the next fiscal year, although at a slower pace than in 2024-2025. Over the next two years, Egypt is set to repay approximately USD 15 billion annually in debt, through a combination of debt issuance and foreign direct investments.
However, the report warns that risks remain, particularly if non-oil exports fail to meet expectations or if import costs rise at a faster rate. The report also highlighted concerns about declining foreign direct investment, which could reduce foreign reserves. Portfolio investments, which make up about 80 per cent of Egypt’s reserves, are seen as an unreliable funding source.
Fitch Solutions estimates that remittances will increase to USD 28.7 billion this fiscal year, compared to USD 21.9 billion in the previous year. Notably, remittances surged from USD 5 billion in Q3 2023-2024 to USD 7.5 billion in Q4, marking the highest level since Q4 2021-2022.
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Remittance inflows are projected to rise further, bolstered by an economic recovery in Gulf Cooperation Council countries, where many Egyptian expatriates reside. Growth in the region is expected to accelerate from 1.4 per cent in 2024 to 4.2 per cent in 2025.
