The IMF's October 2026 World Economic Outlook report projects Ethiopia's real GDP to grow by 9.2 percent this year, matching last year's performance, but warns the expansion will slow to 7.8 percent in 2027. Despite the positive growth outlook, the fund raised concerns about two major economic headwinds facing the country.
Inflation remains a significant challenge. The IMF estimates consumer price inflation reached 16 percent in 2025 and projects it will decline to 11.7 percent in 2026 before rising again to 12.3 percent in 2027. The fund warned that persistently high inflation erodes household purchasing power and increases business operating costs, potentially limiting improvements in living standards even as the economy grows.
The IMF also flagged Ethiopia's external account position as a concern. The country's current account deficit is projected to widen from 0.8 percent of GDP in 2025 to 2.5 percent in 2026 before narrowing to 1.3 percent in 2027. The fund cautioned that global economic shocks, including fluctuations in oil and food prices, could intensify inflationary pressures and strain Ethiopia's external accounts.
The IMF urged Ethiopian policymakers to strengthen fiscal capacity by increasing domestic revenue and improving public spending efficiency. The fund also recommended that government support for people affected by rising fuel and food prices should be temporary and targeted, warning that broad-based support could strain public finances.