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Ethiopia's economy struggles as war reignites in Tigray

Once home to one of Africa’s fastest growing economies, Ethiopia is struggling as the war in its Tigray region has reignited and weary citizens far from the front are pleading for peace

NAIROBI, Kenya -- Once home to one of Africa’s fastest-growing economies, Ethiopia is struggling as the war in its Tigray region has reignited and weary citizens far from the front are pleading for peace.

Ethiopians are experiencing the highest inflation in a decade, foreign exchange restrictions and mounting debt amid reports of massive government spending on the war effort. Parliament early this year reportedly approved an additional $1.7 billion budget for defense.

On Tuesday morning, a drone strike hit a university campus in Tigray’s capital, Mekele, causing an unknown number of injuries, according to a media worker there who spoke on condition of anonymity because he didn’t have authorization to speak to other outlets. He said another drone strike also destroyed the station of regional broadcaster Dimtsi Woyane.

Ethiopian officials continue to paint a rosy picture for the country of well over 110 million people. “Our economy has continued to grow amid natural and man-made problems,” the planning and development minister, Fitsum Assefa, said earlier this month.

But the Ethiopian Economic Association’s meeting this month made clear the country is hurting, while international mediators urgently seek progress on talks to end the fighting.


Because of internal conflicts, the destruction of infrastructure and uncontrolled spending are hurting the economy while ordinary Ethiopians face weakening incomes and rising poverty, economist Alemayehu Seyoum told the meeting.

Ethiopia once seared into the global consciousness with a devastating famine in the 1980s. The country has since transformed its economy with mega-projects like the Grand Ethiopian Renaissance Dam, the largest in Africa, and large-scale construction projects in Addis Ababa, Africa’s diplomatic capital.

The economy grew at an average of 11% over the past decade.

But the war in the northern Tigray region, which began in late 2020, has caused immense disruption. In June, the International Monetary Fund said growth likely fell to 3.8% for 2021-2022 because of the war and a “sharp fall in donor financing,” among other factors.

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