Ethiopia Economic Outlook
One of Africa’s fastest-growing economies:
Ethiopia has been one of the fastest-growing economies globally over the past two decades, with annual GDP growth averaging around 8–10%. The government’s state-led development model has prioritized infrastructure, industrialization, and agricultural modernization. However, recent years have seen economic turbulence due to political instability, the Tigray conflict, and foreign exchange shortages.
Industrialization and infrastructure push:Ethiopia has aggressively pursued industrialization, establishing special economic zones and industrial parks to attract foreign manufacturing investment. The country has also invested heavily in transport and energy infrastructure, including the Grand Ethiopian Renaissance Dam (GERD), which aims to transform Ethiopia into a regional energy hub. The government’s import substitution strategy has led to a growing manufacturing sector, particularly in textiles and apparel.
Challenges:Political instability and debt burden: Ethiopia’s rapid economic growth has been tempered by political unrest and a rising debt burden. The Tigray war and ethnic conflicts have disrupted trade and investment, while high government spending on infrastructure has led to mounting public debt. The country faces severe foreign exchange shortages, making imports more expensive and constraining business operations. Inflation remains elevated, further straining consumer purchasing power.
Ethiopia’s economic outlook:Ethiopia’s economic growth is expected to recover as political stability improves. The government’s shift towards economic liberalization, including privatization of key sectors like telecoms and banking, could attract foreign capital. However, reducing macroeconomic imbalances, improving governance, and strengthening institutions will be critical for long-term stability. Ethiopia has strong economic potential, but realizing it depends on sustaining reforms and ensuring peace.
Ethiopia's Macroeconomic Analysis:
Nominal GDP of USD 159.7 billion in 2022.
Nominal GDP of USD 159.7 billion in 2022.
GDP per capita of USD 1,511 compared to the global average of USD 10,589.
GDP per capita of USD 1,511 compared to the global average of USD 10,589.
Average real GDP growth of 7.6% over the last decade.
Average real GDP growth of 7.6% over the last decade.
Sector Analysis
In 2022, services accounted for 37.0% of overall GDP, manufacturing 4.5%, other industrial activity 22.7%, and agriculture 35.8%. Looking at GDP by expenditure, private consumption accounted for 78.9% of GDP in 2023, government consumption 6.3%, fixed investment 22.2%, and net exports -7.4%.International trade
In 2022, manufactured products made up 9.1% of total merchandise exports, mineral fuels 0.0%, food 81.5%, ores and metals 0.7% and agricultural raw materials 8.7%, with other categories accounting for 0.0% of the total. In the same period, manufactured products made up 68.4% of total merchandise imports, mineral fuels 6.4%, food 23.8%, ores and metals 1.0% and agricultural raw materials 0.5%, with other goods accounting for -0.1% of the total. Total exports were worth USD 3.50 billion in 2023, while total imports were USD 17.10 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 7.6% in the decade to 2022. To read more about GDP growth in Ethiopia, go to our dedicated page.
Fiscal policy
Ethiopia's fiscal deficit averaged 2.7% of GDP in the decade to 2022. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 3.0% in the decade to 2023. For more information on Ethiopia's unemployment click here.
Inflation
Inflation averaged 16.6% in the decade to 2023. Go to our Ethiopia inflation page for extra insight.
Monetary Policy
Ethiopia's monetary policy rate ended 2023 at 7.00%, down from 7.50% a decade earlier. See our Ethiopia monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the birr weakened by 84.1% vs the U.S. dollar. For more info on the birr, click here.
Economic situation in Ethiopia
After accelerating in FY 2023 (8 July 2023–7 July 2024), the economy has likely lost steam so far in FY 2024 amid domestic conflict. In March, a dissident faction within the Tigray People's Liberation Front (TPLF) seized several cities in the Tigray region, which was center stage in Ethiopia’s civil war. According to the government-backed faction of the TPLF, the dissident faction has sought support from neighboring Eritrea, which has denied involvement. To prevent widespread conflict, Ethiopia’s prime minister is reportedly considering reshuffling Tigray’s administration. More positively, the economy is benefitting from pro-market reforms, IMF funding and easing inflation. In other news, in March it was announced that the state-owned airline will partner with the African Development Bank to build Africa’s largest airport worth USD 7.8 billion, boding well for investment and tourism.Ethiopia Economic Forecasts
Projections out to 2034.33 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 13 expert analysts.
Want to get insight on the economic outlook for Ethiopia in the coming years? FocusEconomics collects projections out to 2034 on 33 economic indicators for Ethiopia from a panel of 13 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Ethiopia economy. To download a sample report on the Ethiopia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.