UNDP Ethiopia Quarterly Economic Profile January 2024


pdf (1MB)


UNDP Ethiopia Quarterly Economic Profile January 2024

February 19, 2024

  • Economic Growth: Ethiopia’s economy grew by 7.2 percent in 2023 according to the Government figures, while the IMF estimated the economy grew by 6.1 percent. Services sector remains resilient, while manufacturing continues to be weak. Independent estimates show that Ethiopia’s economy grew as low as 4.5 percent in 2023. 

  • Forex and currency: Foreign reserves have fallen to less than USD 1 billion, covering less than 2 weeks of imports (NBE, September 2023). The Birr remains overvalued. Data from January 2024 show the Birr is trading at 110 birr/USD on the parallel market and 56 Birr/ USD at the official rate. 

  • Fiscal: The fiscal deficit/GDP ratio has reduced to 2.9 percent against 3.6 percent in the preceding fiscal year. Grants continue to face a secular decline. The Government has announced a USD 20 billion need for reconstruction funds. 

  • Monetary: Direct advances from the NBE and issuance of T-bills continue to play a key role in deficit financing. Money supply annually increased by 26.6 percent in June 2023 but showed slower growth of 6.4 percent from July to December 2023. 

  • Inflation: Inflation in Ethiopia remains stubbornly high. There has been a slight slowdown in headline inflation at 28.7 percent in December 2023 in contrast to 34.2 percent in March 2023. 

  • Balance of Payments: The current account deficit was USD 5.7 billion or 3.5 percent of GDP in 2023 compared to 4.2 percent of GDP in 2022. The overall balance of payment deficit in 2023 was USD 752 million and USD 2.1 billion in 2022. 

  • Debt: Ethiopia faces a significant debt overhang and a USD 1 billion debt repayment on the Eurobond. Ethiopia became Africa's third defaulter after it failed to make a USD 33 million "coupon" payment on its Eurobond. The Government has applied for debt restructuring with the G20 Common Framework (CF) in January 2021. In December, 2023, Fitch Ratings downgraded the country’s credit rating to “C” and the Eurobond to “restricted default” after a grace period expired for a payment originally due on December 11, 2023. 

  • Social: Defense and debt servicing continued to eclipse social spending. Due to low external financing, there has been a reduction in poverty-related current expenditure and an erosion in the social safety net program. According to the World Food Program, more than 20 million people across Ethiopia will need food aid in 2024. For the 2024 budget, UNICEF estimates that around 33 per cent of the federal budget is allocated to pro-poor sectors (namely education, health, road construction, water and energy, and agriculture), which represents a significant decline from 59 per cent in 2020.

Document Type
Regions and Countries
Sustainable Development Goals