Ethiopia’s economy is purportedly experiencing robust growth, with the International Monetary Fund projecting a 9.2% real expansion for the 2025–26 fiscal year. However, analysts suggest that renewed fighting in the northern regions and severe climate challenges threaten to undermine these official recovery figures.

Financial expert Abdulmenan Mohammed warns that any major escalation could render current growth unsustainable. The devastation from the 2020–2022 Tigray conflict inflicted over $22 billion in direct and indirect damages, leaving the Ethiopian authorities struggling with heavy reconstruction costs and lingering structural weaknesses.

Public finances remain heavily strained, exacerbated by a previous Eurobond default and persistent inflation. If the conflict persists, state resources will inevitably be diverted toward military spending rather than critical infrastructure, ultimately increasing economic hardship for local businesses and households.

Source: www.dw.com