Prime Minister Abiy Ahmed told parliament in early February that Ethiopia is on track for 10.2% economic growth in the fiscal year ending July 2026, up from the finance ministry’s June projection of 8.9%, and that annual inflation has returned to single digits after surging close to 30% two years ago. With general elections scheduled for June, both numbers arrive in deeply contested political terrain.
The upward revision is grounded in real reform momentum. Ethiopia launched a $3.4 billion IMF programme in July 2024 anchored on exchange rate liberalisation, debt restructuring and the gradual opening of the economy to private investment. The birr’s shift to a floating rate caused an immediate 50% depreciation but has since helped compress the gap between the official and parallel markets and boosted export competitiveness. Coffee export earnings reached $2.6 billion in the 2024 to 2025 fiscal year, nearly double the $1.43 billion recorded the year before, even though Ethiopia remains suspended from AGOA following human rights concerns tied to the Tigray war. Total exports surpassed $8 billion, with gold and horticulture alongside coffee as the main drivers. The full operational launch of the Grand Ethiopian Renaissance Dam has added hydropower capacity and created new electricity export revenue streams across the region. A new Banking Business Proclamation enacted in March 2025 allows foreign ownership of up to 49% of Ethiopian banks for the first time, and a $7.8 billion airport at Bishoftu near Addis Ababa is under construction with completion targeted for 2029.
The scepticism runs just as deep. Africa Practice, in a December 2025 assessment, described the June election as shaping up to be a turbulent replay of the flawed 2021 vote, with roughly one fifth of parliamentary seats still vacant from constituencies where competitive voting was not possible. High youth unemployment, labour strikes and insurgencies in both Amhara and Oromia regions continue to feed a security crisis that macro data does not fully capture. The National Bank of Ethiopia is holding its benchmark interest rate at 15% and capping credit growth at 18% to keep inflation in check, a restrictive stance that limits how broadly the growth dividend reaches ordinary households. The Coface country risk assessment flags ongoing tensions over the disputed western Tigray territories and a cost of living crisis that voters are experiencing directly regardless of what the headline GDP figure says.
Ethiopia’s economy was averaging around 11% annual growth before the Tigray war broke out in 2020, a conflict that cost more than $28 billion in damages and left more than a million people in the north still reliant on humanitarian aid. A return toward double digit growth would represent a genuine recovery, but the path from government projection to lived experience remains contested.
The Bigger Picture Ethiopia’s pre-election economic narrative follows a familiar pattern across the continent: strong aggregate numbers, genuine structural reforms, and persistent gaps between the headline and the household. The 10.2% figure is plausible given the IMF programme’s discipline and the export performance data. What it cannot obscure is that the June election will be held in a country where competitive politics in large parts of the territory remains impossible, where a peace agreement with Tigray remains incompletely implemented, and where a government asking voters to renew its mandate is simultaneously the same government that prosecuted a war that set the economy back by years. The macroeconomic recovery is real. Whether it translates into political legitimacy is an altogether different question.
Source: Africa Confidential, Foreign Policy, Africa Practice
