Ministry of Planning and International Cooperation: GDP growth of 4.31% in the second quarter of 2024/2025
Against the backdrop of the Egyptian government adopting clear policies to consolidate macroeconomic stability and govern investment spending.
The Ministry of Planning, Economic Development and International Cooperation announced the results of economic performance during the second quarter of fiscal year 2024/2025, as part of its periodic reports on Egypt's economic performance. The gross domestic product (GDP) recorded a growth rate of 4.31%, compared to 2.31% in the corresponding quarter of the previous fiscal year. This growth is attributed to the Egyptian government's adoption of clear policies to consolidate macroeconomic stability and govern investment spending.
Dr. Rania Al-Mashat, Minister of Planning, Economic Development and International Cooperation, emphasized that the continued recovery in GDP growth in the second quarter of the current fiscal year reflects the positive impact of the corrective policies implemented by the government at the fiscal and monetary levels, as well as the reduction in public investments, to consolidate macroeconomic stability and enhance the business environment. This is driven by structural reforms aimed at diversifying sources of growth and increasing the competitiveness of the Egyptian economy, which was evident in the strong performance of productive sectors such as manufacturing, tourism, and communications. She added that the government is moving forward towards shifting to tradable sectors such as manufacturing, for a more diversified and sustainable economy, enhancing Egypt's ability to confront global economic challenges.
Al-Mashat said that the private sector plays a pivotal role in leading the development process, as its investments increased by 35.41% during the second quarter, exceeding public investments for the second consecutive quarter. This confirms the effectiveness of policies aimed at empowering the private sector and enhancing its participation in driving economic growth, and governing public investments to make room for local and foreign investments. She explained that these indicators were achieved despite the ongoing geopolitical tensions and global challenges, and the contraction of a number of key sectors such as the Suez Canal and extractions.
Non-petroleum manufacturing activity achieved a positive growth rate for the third consecutive quarter, reaching 17.741 TP3T, compared to the same period of the previous fiscal year, during which the activity recorded a contraction rate of 11.561 TP3T. This growth was driven by an increase in industrial production as a result of customs clearance facilities for raw and primary materials for the industrial sector. This recovery witnessed by industrial activity was expressed by the Manufacturing Industry Index (excluding crude oil and petroleum products), which reached 17.71 TP3T during the second quarter of fiscal year 2024/2025. The main sectors stimulating this growth included the automotive industry (73.41 TP3T), ready-made garments (61.41 TP3T), beverages (58.91 TP3T), and textiles (35.31 TP3T).
Several economic sectors continued to achieve positive growth rates during the second quarter, with tourism activity (represented by restaurants and hotels) recording a growth rate of 181 TP3T, coinciding with an increase in the number of tourists to 4.41 million during the second quarter of the fiscal year. The number of tourist nights also rose to 41.92 million nights during the same quarter. In addition, the communications and information technology activity achieved a growth rate of 10.41 TP3T, driven by the expansion of digital infrastructure and the increase in demand for internet services.
Financial intermediation, transportation and storage, construction, social services (including health and education), insurance, and electricity also achieved positive and high growth rates of 11.61%, 9.41%, 4.81%, 4.61%, 4.61%, and 3.91%, respectively. This reflects the diversification of the Egyptian economy's growth sources, which aligns with the state's vision for structural diversification of the economy and accelerating development rates across all sectors.
On another note, Suez Canal activity continued to decline during the second quarter of fiscal year 2024/25, contracting by 701% due to geopolitical tensions in the Bab al-Mandab Strait, which negatively impacted navigation through the Suez Canal, with the tonnage and number of ships passing through the canal declining.
Similarly, extraction activity witnessed a decline in growth by 9.21 TP3T as a result of the contraction in petroleum and natural gas activities during the second quarter of the fiscal year 2024/2025, as petroleum activity declined by 7.51 TP3T and natural gas by 19.61 TP3T.
The impact of investments in new discoveries and the development of production fields is expected to become apparent in the coming period.
On the spending side, net exports contributed positively to growth (1.75 percentage points) for the first time since the first quarter of fiscal year 2023/2024, driven by growth in goods and services exports. Government spending also contributed approximately 0.14 percentage points to this growth. Investment and changes in inventories contributed approximately 0.11 percentage points, influenced by economic policy trends toward governance and rationalization of public investments, versus increased private investments, with the aim of enhancing the efficiency of investment spending and stimulating the role of the private sector in driving economic growth.
In this context, investment data reflects a growth of 35.41% in private investment in the second quarter of fiscal year 2024/25 compared to the corresponding quarter of the previous fiscal year, accounting for more than 501% of total investments. Meanwhile, public investment contracted by 25.71%, representing less than 401% of total investments. This shift reflects significant changes in the investment structure in Egypt.
Last December, the Ministry of Planning, Economic Development, and International Cooperation launched the Private Investment Index for the first time since 2020, following a review of private investment data according to an updated methodology. This comes as part of the state's commitment to developing the national accounts system and improving the accuracy of economic indicators.
The economic outlook remains positive, supported by ongoing structural reforms that contribute to enhancing macroeconomic stability, along with the strategic transition from a non-tradable to a tradable economy, enhancing the country's ability to meet global challenges. Private investment is expected to play a key role in maintaining this momentum and creating an environment conducive to long-term growth.
