Renewed conflict threatens ethiopia's economic growth
The IMF forecasts 9.2% growth for 2025-26, but fighting could deter investment and raise living costs.
Renewed fighting in northern Ethiopia threatens the country's strong economic growth, which the IMF forecasts at 9.2% for the 2025-26 fiscal year. The conflict could deter investment, strain public finances, and increase the cost of living.
Financial analyst Abdulmenan Mohammed warned that a major conflict would make current economic growth unsustainable. The 2020-2022 war caused extensive damage, with a World Bank assessment putting damage between November 2020 and December 2021 at over $22.6 billion.
A reconstruction plan from 2023 to 2028 faces funding uncertainty, and the economy is still recovering from the previous war's impact, including lost output and foreign currency shortages. Ethiopia also lost duty-free access to the US market under the AGOA in 2022.
Why it mattersRenewed conflict in Ethiopia could deter investment, strain public finances, and push up the cost of living, impacting the country's economic recovery.