IMF: Egypt's economy absorbs geopolitical shocks through exchange rate flexibility

The International Monetary Fund (IMF) reports that the Egyptian economy has demonstrated a greater capacity to absorb the impacts of regional geopolitical tensions compared to previous external shocks. This resilience is attributed to rapid policy responses, improved reserves, and exchange rate flexibility, which helped absorb capital outflows rather than placing the full pressure on international reserves.

According to the IMF report, ‘Resilience Under Pressure: The Egyptian Economy Defies Expectations’, economic reforms implemented under the IMF-supported program have supported growth rates and placed inflation on a downward trajectory. Real GDP growth was recorded at 5% during the third quarter of the 2025/2026 fiscal year. Additionally, the tourism sector and remittances from Egyptians working abroad have shown notable resilience, while Suez Canal activity is undergoing a gradual recovery.

Despite these gains, the IMF warned that maintaining stability requires accelerating structural reforms and supporting private sector-led growth. High public debt, financing needs, and the extensive role of the state in the economy remain risks that could leave Egypt vulnerable to new pressures if global financing conditions shift or external shocks recur.