The IMF's new World Economic Outlook publication estimates that while Ethiopia's economy will continue outperforming global averages, high inflation threatens its macroeconomic stability.
For Ethiopia, the Fund forecast GDP growth of 6.2 percent in 2024 and 6.5 percent in 2025, lower than the government's projection of 7.5 percent growth. However, Ethiopia's growth is predicted by the Fund to surpass the 3.2 percent projected global rate.
Regarding inflation, consumer prices in Ethiopia are expected to reach 25.6 percent in 2024 before easing to 18.2 percent in 2025 according to the Fund's inflation projections. This timeline misses the government's goal of below 20 percent inflation by 2024 based on projections by the Fund.
Globally, headline inflation is projected by the Fund to decline from 6.8 percent in 2023 to 5.9 percent and 4.5 percent in subsequent years. The Fund forecasts Ethiopian inflation will significantly exceed worldwide averages.
The IMF noted that the global economy has proven resilient in the face of various challenges over the past year, including supply disruptions and high commodity prices driven by the war in Ukraine. While citing resilience, the Fund warned of risks challenging financial systems based on its predictions.
Going forward, risks to the outlook are balanced globally according to the IMF. Downside risks that could prolong inflation include new price shocks from geopolitical tensions and tight labor markets.