Ethiopia’s 10-month internal war has incurred a huge economic cost to Africa’s second most populous nation that could take years to repair.
Prior to the global pandemic and the war, Ethiopia’s economy was one of the fastest-growing in the region, expanding by an average of 10% a year in the decade to 2019, according to the World Bank.
Official statistics show the cost of basic consumer goods has indeed gone up in Ethiopia -they were on average around a quarter more expensive in July than a year earlier.
A US-based analyst who specialises in the Horn of Africa Faisal Roble, says that spending on the war effort “has really negatively impacted Ethiopia’s capacity to access dollars”, and has caused the exchange rate to deteriorate.
Trading Economics forecasts military expenditure in the country will reach $502m (£365m) by the end of the year, up from $460m last year.
Last week, UN secretary general Antonio Guterres said the conflict had “drained over a billion dollars from the country’s coffers”.
According to the International Monetary Fund, Ethiopia’s overall economic growth for 2021 is forecast to slow significantly from 6% in 2020 to just 2% in 2021 – the lowest level in almost two decades.