Ethiopia's Economy Takes $50 Billion Hit After Currency Float

The Ethiopian economy has taken a significant hit since the country's currency floated in July 2024. According to a report from the European Union Delegation, Ethiopia's nominal GDP dropped by $50 billion between 2023 and 2025.

This decline is largely due to the devaluation of the Birr against the US dollar, which has had a ripple effect on the country's economy. Despite real growth, the nominal figures provided by the International Monetary Fund show that Ethiopia's GDP contracted from nearly $160 billion in 2023 to $109.1 billion in 2025.

However, projections indicate a positive trajectory for the Ethiopian economy, with expectations that it will match its 2023 nominal GDP level by 2028. In the meantime, neighboring Kenya has temporarily surpassed Ethiopia in nominal terms, reaching $136.5 billion driven by a strengthening shilling and economic diversification.

The report also notes that inflation has hit a roadblock, rising to 11.7 percent in April 2026 after a downward trend. The National Bank of Ethiopia's goal of capping inflation around 10 percent for the fiscal year ending July 2026 appears out of reach.