According to the International Monetary Found the second fastest growing country in the world in 2026 is Ethiopia, behind only oil-booming Guyana at impressive 9.2% real GDP growth. And it isn’t just one year outlier, since 2008 Ethiopia has posted +8% real GDP growth every single year, with strong growth projected to go through the next 5 years.

It’s even more impressive when you consider that during all this period Ethiopia has been in the state of perpetual war. Between 2020 and 2022 Ethiopia has been involved in brutal war of extermination against its Tigray province, since 2023 it is engaged in war in the Amhara region, and since 2018 in the Oromo region. These three regions compromise the most important parts of Ethiopian state. Estimates of the Tigray War alone put the number of deaths between 100,000 and 600,000, one the single worst conflicts of the entire 21st century. So why is it growing regardless?

Economic data of developing countries is notoriously poor, so question may arise how real the economic boom even is. It would be easy to dismiss as some kind of statistic artifact of IMF’s data extrapolation of Ethiopia’s government fraudulent data generation.

What do the numbers say

There a few ways one could go about it. I decided to turn into Afrobarometer survey data from 2020 and 2024 to explore economic situation of the citizens of the nation. Here are some striking results I found:

- From 2020 to 2024 percentage of households with electricity grew from 29% to 43%;

- Percentage of households where at least one members owns a car or motorcycle went from 4% to 38%;

- Percentage with running water in house went from 10% to 24%;

- Percentage of people with access to communal or household latrine went from 62% to 91% (though majority still only have to use communal latrines, indoor plumbing is rare).

Using night lights can also provide us with some objective data about economic performance of cities:

Since 2020 the average nighttime light intensity in Addis Abeba has more than tripled.

Electricity

In 2000 Ethiopia generated mere 1,646 GWh of electricity. By 2025 this number has increased 18 time to 29,480 GWh. This overwhelmingly comes from hydropower generation. Third of it was provided by the Grand Ethiopian Renaissance Dam, a massive infrastructure project constructed between 2011 and 2023.

The project, without international backing due to Egypt pressure, was constructed mostly using bond selling and employee contributions - Ethiopian workers were asked by the government to contribute parts of their salaries to the project via a massive fundraising effort. For the construction of the project more than 10 million m³ of domestically-source concrete was used. For the purpose entirely new Lemi National Cement Factory was constructed, producing more than 15,000 tonnes of concrete. Another booming sector is off-grid solar power with 35.7% of households reported having off-grid solar panels as of 2026. Country also manufactures its own solar panels with new Japanese-funded 4GW cell manufacturing plant reaching its limit in October 2025.

Alongside its expansion of electricity production, Ethiopia also started building transmission lines. In November 2022 Sodo–Moyale–Suswa High Voltage Power Line was completed between Ethiopia and Kenya allowing it to export more electricity to its southern neighbor.

Land policy

In Ethiopia there is no such thing as private land. All land is owned by the state and people may lease it from the government for public purposes. But they do own the rights to improvement on that land including any buildings or factories. Typically urban land is leased for 50-99 year periods either via an auction or allotment for specific public purposes. These leases may be sold between parties. The government can at any time revoke the lease and take the land for its own construction projects, often displacing people in the process.

Ethiopian government has directly pursued housing development via public-private partnership and land allotment, with more than half a million houses built in 17 years in Addis Ababa alone. Regardless the rent burden is high with households reportedly paying between 30 and 50% of their income on rent in the center of Addis Ababa.

Between 2019 and 2026 Ethiopia’s all-weather road length increased from 126,000 to 170,000 km. A new rail line connecting the capital with Djibouti was opened in 2018, the first electrified standard-gauge line in Africa built as a part of the Belt and Road initiative. The railway is owned by semi-public Ethiopian Railways Corporation which is run as a for-profit company and it turned profitable for the first time in 2025 after government took control of it from China.

Agriculture

Ethiopia has seen a strong growth in agricultural production with total output rising from 1993 more than fivefold.

Historically, agriculture has been overwhelmingly rain-fed limiting it during the dry season. In 2021 only around 1.1 million hectares of agricultural land were irrigated year-round in Ethiopia, rising to 2.7 million hectares by 2026. A lot of expansion in the irrigation has bee driven by solar-powered irrigation, made possible by abundance of shallow ground-water.

A lot of it has been driven by small solar-powered pumps installed by medium and small-scale farmers which allowed them to produce more crops including onion, tomato, chili and cabbage and increasing their revenue 4- or 10-fold. With rain-fed maize and teff bringing them around US$207 per year, now farmers with solar-powered water pumps earn on average US$709 from onions, $274 from peppers, and $77 from cabbage.

In 2020 an Ethiopia-wide Ethio-Seed Hub Platform was created in partnership with international organizations allowing Ethiopian farmers to access and get information about seed varieties online. In Ethiopia foreign companies are generally not allowed to patent seeds but domestic traditional seed breeders can get sui generis rights.

Between 2020 and 2025 Ethiopia’s tractor plowing rate has increased from 5.7% to 25% while the number of combine harvesters increased from 2,700 to 15,000 over the same time period, thanks in large part to tax exemption for agricultural equipment in place since 2019. In 2023 Ethiopia’s fertilizer consumption reached all-time high of 45kg per hectare of arable land, up from 7 kg in 1993.

Mining

One of the fastest growing areas of Ethiopian economy is mining. The revenue from gold mining has risen from $409 million in mid-2024 to $3.5 billion in mid-2025. Only in 2021 the mining sector rose by 115%. The removal of foreign exchange control recently made it easier for mining companies to important heavy equipment. Ethiopia also licenses its artisanal mining allowing traditional miners to deposit the gold in state banks and receive government-granted payments. Total amount of gold produced by small-scale and artisanal miners increased from 0.82 million grams between 2017 and 2018 to 3.18 million grams between 2018 and 2019. It is a source of livelihood of one million Ethiopia workers often with no other source of cash income.

In 2013 new Ethiopia’s law legalized the use of new technology in small-scale and artisanal mining operations. In the 2024/25 fiscal year more than 1,300 DX360 excavators were sold in Ethiopia, up 470% from previous year for small-scale gold mining.

Social security and budget

In 2025 Ethiopia’s government spending accounted for approximately less than 7% of GDP, itself halving since 2015, driven largely by decrease in infrastructure spending.

The debt-to-GDP ratio stands at around 40%, a decline from more than 100% of GDP in 2002. Ethiopia spends little amount on pensions with only 15% of targeted population covered and social security payments accounting only for 30% of pre-retirement wage. The country has no minimum wage. In 2024 Ethiopia made its currency free-floating. Only 6.6% of Ethiopia’s population is employed in public sector, with majority of population self-employed or in informal sector.

Ethiopia has no government-sponsored universal healthcare which is not surprising given its fiscal constraints. Instead it has community-based health insurance where people in villages pool their resources together in case one of them gets sick. In 2019 the system covered 28.1% of the population including more than 55% in Amhara region, while by 2023 according to some surveys between 45 and 55% of Ethiopia’s population in some regions was covered by the scheme. The community insurance system decreased out of pocket spending and increased healthcare utilization. Number of hospital beds in Ethiopia increased from 2 per 10,000 people in 2008 to 3.8 per 10,000 people in 2023.

The maternal mortality rate in Ethiopia has decreased by more than 80% since 1990, faster than any of its neighbors.

Ethiopia is not a well-educated country by any metric. Ethiopia allows child employment since the age of 15. The unemployment rate among the youth stands at merely 5.5%, below all of its neighbors and half as low as the United States. With low higher-education graduation rate it indicates that Ethiopia’s youth relatively quickly enter the labor market upon completion of the education, with Ethiopia only having 8 years of compulsory education (and in practice only 4 years completed on average) and no tuition-free tertiary education.

Special economic zones

One of the first special economic zone, Hassawa IP, was opened in 2016 by a Chinese company, employing mostly women in the clothing industry. The zone created more than 60,000 jobs and 1 billion dollars in export revenue. Since then more than 16 SSEs have been established. In 2024 new SSE law was enacted offering multiple incentives to the companies including custom exemptions, zero-rate VAT, exemptions from domestic indirect taxes, duty-free imports for construction materials, protection from expropriation, work permits, remittance and opening of foreign currency accounts. Studies have shown that creation of one such zone boosts the district economic output by 18%, with 80% of their workers being women.

The multiple tax exemptions provided to the zones led to Ethiopia’s overall decline in tax revenue, which is part of the gambit Ethiopia made to attract foreign companies. The zones try to compete with low wages for international companies, which often leads to workers to switching to other, better-paying jobs amid low training rates.