Addis Ababa, Ethiopia – Ethiopia’s economic landscape is undergoing significant changes, with inflation rates reaching a five-year low, exports witnessing record growth, and foreign exchange availability improving. The latest data from the National Bank of Ethiopia (NBE) and the Ethiopian Statistical Service indicate a shift in key economic indicators, reflecting ongoing policy adjustments and market responses.

Ethiopia’s inflation rate dropped to 15.5% in January 2025, down from 29.4% in January 2024, representing a 13.9 percentage point decline. This marks the lowest inflation level recorded in the last five years.

The reduction in inflation is attributed to a combination of monetary policy measures, stabilized supply chains, and improved domestic production.

These trends suggest a decrease in consumer price pressures, particularly in essential goods. However, the sustainability of this decline will depend on factors such as global commodity prices, agricultural performance, and policy execution in the coming months.

Ethiopia’s exports have experienced a historic surge, reaching $3.27 billion in the July–December 2024 period, more than doubling from $1.60 billion in the same period of 2023—an increase of 104.3%.

This growth is largely driven by gold and coffee exports, which have seen substantial gains:

Meanwhile, total imports declined by 4%, falling from $8.99 billion in July–December 2023 to $8.63 billion in July–December 2024. This decline in imports is partly due to foreign exchange constraints, local production increases, and government policies aimed at reducing dependency on imported goods.

Remittance inflows and foreign exchange sales by banks have both increased, signaling greater foreign currency availability in the market.

While these developments are positive, analysts note that sustained foreign exchange stability will depend on factors such as export performance, foreign direct investment (FDI) inflows, and government reserve policies.

The Ethiopian financial sector is also undergoing adjustments, with key interest rates moving closer to market levels.

These interest rate adjustments suggest a shift toward a more market-driven financial system, potentially enhancing credit availability and overall economic stability.

The current economic trends suggest a shift in Ethiopia’s economic landscape, with declining inflation, rising exports, and growing foreign exchange availability. However, several challenges remain:

As Ethiopia navigates these economic adjustments, policymakers, investors, and businesses will be monitoring developments closely to assess long-term stability and growth potential.