Analyst warns renewed fighting could stall Ethiopia’s 9.2% growth
The IMF expects Ethiopia's economy to grow 9.2% in 2025-26. New fighting in the north could push up inflation, drain public funds and scare off investors, a London-based analyst told DW.
Ethiopia's economy is growing fast, but renewed fighting in the north could put that growth at risk, DW reported. AllAfrica and The Eastleigh Voice also carried the report. The International Monetary Fund (IMF) forecasts real growth of 9.2% for the 2025-26 fiscal year. Reconstruction costs and climate-related crop problems add to the strain. "If there is a major conflict [...] the current economic growth will not be sustainable," London-based financial analyst Abdulmenan Mohammed told DW. He said a new war would force the government to spend more on soldiers, equipment and logistics. At the same time, tax revenue from the affected regions could fall. In his view, money meant for infrastructure, education and social services would instead be tied up in military spending. Prices are another worry. The IMF forecasts average inflation of 11.7% for 2025-26. Mohammed said inflation would likely rise if the conflict escalates. More domestic borrowing could squeeze private firms out of the credit market. Military demand for foreign currency could also weaken the birr and make fuel, imported goods and industrial inputs more expensive. Mohammed named agriculture, tourism and hospitality as the most exposed sectors. He…
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