Since 2000, Ethiopia has achieved remarkable economic growth, driven by public investment in infrastructure and industrial expansion, positioning itself as one of Africa’s fastest-growing economies. Coupled with extensive construction projects, the service and agricultural sectors also made modest contributions. However, since 2020, the country has faced significant setbacks, including internal conflicts that disrupted production and trade, alongside the global COVID-19 pandemic, which exacerbated supply chain disruptions and weakened demand for exports. These challenges were further compounded by rising inflation, which strained household incomes and increased the cost of living, and a severe shortage of international reserves, making it difficult to stabilize its currency. The recent decision to float the Ethiopian birr has added to the volatility, causing currency fluctuations that have increased uncertainty in trade and investment flows. These converging shocks have placed immense pressure on Ethiopia’s economic stability, underscoring the need for carefully managed reforms and international support to restore macroeconomic balance.
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