In a bid to soften the social impact of Egypt’s economic reform program, Prime Minister Mostafa Madbouly pledged that his government would “focus on improving citizens’ living conditions so they can feel the gains of development and reform beginning next year.”
Madbouly’s comments, made at a news conference late on Thursday, came as the Ministry of Planning and Economic Development reported that Egypt’s quarterly growth rate had risen to its highest level in three years, reaching 5.3 % in the first quarter of the current fiscal year, 2025 to 2026.
But the ministry’s emphasis on what it described as “continued improvement” in Egypt’s economic indicators has raised questions about why this progress has not translated into lower consumer prices, especially after annual inflation resumed its upward trend last month.
Economists say growth figures do not necessarily reflect changes in living standards, adding that the numbers point to gains in the macroeconomy rather than improvements felt by individuals.
The government’s decision to raise fuel prices last month pushed annual inflation higher in October, ending four months of declines. The rate reached 12.5 % compared with 11.7 % in September, according to figures released by Egypt’s Central Agency for Public Mobilization and Statistics.
Prices of packed fava beans, rice, oil, sugar, Romano cheese, meat, and industrial ghee all rose in Thursday’s trading, according to data published by the Information and Decision Support Center.
Madbouly said Egyptians “will begin to reap the benefits of reform and development starting next year.”
He added that his government would concentrate on ensuring that citizens feel the impact of economic reforms through better wages, stable prices, improved living conditions, and enhanced health and education services.
During the same news conference, Minister of Planning and Economic Development and International Cooperation Rania al-Mashat said the economy continued to post positive indicators that reflect the impact of structural reforms.
She said gross domestic product growth rose to 5.3 % in the first quarter of the current fiscal year, up from 3.5 % in the same period last year, describing it as the highest rate in three years.
Improvement in growth figures does not automatically mean better living standards, said Waleed Gaballah, a member of the Egyptian Association for Political Economy, Statistics and Legislation.
He said changes in prices of goods and services depend on other factors, including wage levels, interest rates, and banking policies. He added that macroeconomic gains may reach certain segments of society but not all.
Gaballah said improvements in living standards should be linked to unemployment levels and wages. He told Asharq Al-Awsat that people will start feeling the benefits when wage increases outpace inflation.
“If the government can bring inflation below 10 % next fiscal year while raising wages above that level, Egyptians will feel the gains of reform,” he said.
Unemployment in Egypt fell to 6.1 % of the labor force in the second quarter of this year, according to figures released by the statistics agency in August. The government raised the minimum wage to 7,000 Egyptian pounds, with one dollar equal to 47.5 pounds, in July.
Gaballah said that price stability in the current period is in itself an improvement given the economic challenges.
He noted that Egypt’s banking sector faces a major test at the end of this year when banks begin paying out returns on high yielding saving certificates launched in early 2024 at an interest rate of 27 %. He said the payouts could trigger significant shifts in saving, spending, and investment patterns.
He estimated that the total value of high interest certificates and deposits in Egyptian banks stood at around one trillion pounds, meaning the payout schedule will influence liquidity levels in the market.
Mahmoud al-Asqalani, head of Citizens Against High Prices Association, a civil society group, said Egyptian markets are experiencing stagnation due to declining liquidity. He said traders were selling at minimum profit margins because of weak demand.
He told Asharq Al-Awsat that price declines will likely be slow, as they are linked to inflation, the expansion of domestic production, and the growth of exports.
He said improvements in macroeconomic indicators do not necessarily reflect better conditions for individuals.
He added that expectations hinge on government measures to reduce prices early next year, ahead of higher consumption during the month of Ramadan.
Egyptian exports rose 19 % in the first ten months of this year compared with the same period in 2024, while the trade deficit fell 16 % over the same period, according to data released by the prime minister on Thursday. He said the figures show the country is “moving in the right economic direction.”
