Egypt’s central bank delivered its most aggressive policy signal this year, slashing interest rates by 200 basis points on August 28 in a move that exceeded market expectations. The overnight deposit rate fell to 22% and the lending rate to 23%, marking the third cut of 2025 as policymakers seek to stimulate lending and ease financing conditions.
The decision came as Egypt posted stronger-than-expected economic growth. Real GDP expanded 4.5% in the fiscal year ending June, sharply higher than last year’s 2.4% and above the government’s 4.2% forecast. Officials credited IMF-backed reforms, a manufacturing rebound, and renewed foreign investment, including a $24 billion inflow from the UAE.
Elsewhere in North Africa, multinational companies and state-backed projects are reshaping regional economic prospects:
- Morocco: Stellantis announced a €1.2 billion expansion of its Kenitra plant, boosting capacity to 70,000 electric supermini cars annually from 20,000. The automaker is targeting 75% local sourcing by 2030 as part of its EV strategy. Meanwhile, the country’s statistics agency lowered its 2026 growth forecast to 4.0%, citing weaker global demand and rising trade fragmentation.
- Libya: ExxonMobil signed a memorandum of understanding to explore four offshore blocks, marking its return to the country after nearly a decade and its first such agreement since 2015.
- Algeria: China’s Sinopec struck a deal with state-owned Sonatrach to explore the vast 36,000 km² GEG II gas block, signaling renewed confidence in Algeria’s hydrocarbon sector.
The developments highlight how North Africa is attracting renewed foreign investment even as global demand pressures weigh on growth forecasts.
