Cairo 16 December 2024:
The Mastercard Economics Institute released ‘Economic Outlook 2025’, its annual report identifying the themes that will shape next year’s economic landscape. The global economy has managed through a series of shocks admirably over the past few years. The report anticipates 2025 to be defined by shifts in monetary and fiscal policy and a move toward equilibrium rates for growth and inflation.
In Egypt, the GDP in 2025 is projected to grow by 4% year over year, continuing to outperform global GDP growth, which is forecast at 3.2.% – a modest increase on 3.1% in 2024. Meanwhile, consumer spending in the country is predicted to rise by 1.8%, and consumer price inflation is likely to drop to 19.3%.
Economic growth is currently constrained by macroeconomic adjustments, including tight fiscal and monetary policies. However, tourism is likely to remain a bright spot for the country’s economy, with inbound travel showing remarkable resilience.
“With inflation in Egypt moderating, economic growth will gradually rebound. Following a successful 2024, the global economy sets course for another year of expansion, shaped by changing fiscal and monetary policies. As the business cycle matures, the structural forces that have shifted the landscape will become more apparent, helping define the new landing place for economies around the world,” said Khatija Haque, chief economist, EEMEA, Mastercard.
Key findings from the report include:
Pricing priorities
As the prices of goods and services increase, consumers may adjust their buying intentions. For essential goods and services without many substitutes, quantities purchased are unlikely to fall much in response to an increase in prices. However, for those with varied price levels available, we may see ‘trading-down’ – opting for more affordable versions of the product or experience.
In the global travel economy, savvy travelers are increasingly turning to ‘travel twins’, which offer similar attractions and experiences as popular tourist hubs, but at lower prices or with smaller crowds. For example, in Southeast Asia, Lombok’s stunning beaches and serene landscapes offer an alternative to the bustling crowds of Bali. However, with its unique historic landmarks, Egypt remains immune to this trend.
Migration and money
The last few years revealed significant shifts in people and, by extension, capital. Migration generates substantial remittances, with Egyptian expat workers supporting their families back home. Economic recovery and local reforms are expected to sustain remittance growth through 2025, while the continued digitization of the payments industry allows recipients to shift to digital and mobile channels, resulting in considerable cost efficiencies, security and convenience.
Global inflationary pressures continue to ease
Inflation across major economies eased significantly in 2024, underpinned by lower prices of durable goods and reduced inflation for nondurable goods. While upside risks to good prices remain due to tariffs, moderating wage growth is expected to decrease services inflation. The Mastercard Economics Institute predicts trimmed global inflation at 3.2% (removing the top and bottom 10% outliers).
The ‘Economic Outlook 2025’ report draws on a multitude of public and proprietary data sets, including aggregated and anonymized Mastercard sales activity, as well as models that are intended to estimate economic activity.
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