ADDIS ABABA — Ethiopia has officially become Africa’s fifth-largest economy, after a
sweeping GDP rebasing lifted its measured output by nearly 60% to $210.7 billion for the
2025/26 fiscal year, according to the government’s just-released national accounts. The reshuffle,
still rippling across African business pages this morning, repositions Ethiopia behind only South
Africa, Egypt, Nigeria, and Algeria — and ahead of Morocco, Kenya, and the DRC.
The rebase shifts the base year for calculating GDP to 2024/25 from 2015/16. Nine years of
economic change — mobile money, modern retail, construction booms, telecoms liberalization, a
rapidly digitizing financial sector — had been poorly reflected in the old series. The result: the
2024/2025 economy was revised up by 59.2% to $201.42 billion, and the current fiscal year puts
Ethiopia at $210.7 billion.
The new numbers tell a different story about the structure of Africa’s second most populous
nation. Services now account for roughly 36% of GDP, agriculture about 32%, and industry
close to 30% — a sharp shift from the older picture of an overwhelmingly agrarian economy.
Analysts say the share of digital finance, in particular, was dramatically under-measured in prior
years, especially after the entry of Safaricom’s Ethiopian subsidiary, which has driven M-Pesa
adoption from near zero to millions of users in under two years.
The political symbolism is enormous. Prime Minister Abiy Ahmed, who has been navigating a
battered currency, debt restructuring talks, and lingering regional conflict, has an immediate
talking point: on paper, Ethiopia is punching far above its weight. The rebase also complicates an
earlier IMF projection from April 2026, which had the Democratic Republic of Congo
overtaking Ethiopia as sub-Saharan Africa’s fifth-largest economy later this year. The new
numbers push Ethiopia back ahead — statistically at least.
But economists are warning against reading too much into the jump. The rebase does not create
new income, does not reduce Ethiopia’s external debt load, and does not improve the balance of
payments. What it does change is ratios — debt-to-GDP falls on paper, tax revenue-to-GDP
falls, and foreign direct investment-to-GDP falls. Those lower ratios can actually matter in debt
restructuring talks, where creditors look closely at sustainability metrics. In that narrow sense,
the rebase is a diplomatic asset.
Reactions across Africa have been mixed. Kenyan officials, who had seen their country pass
Ethiopia in some rankings in recent years, pushed back privately, noting that Ethiopia’s percapita income remains lower than Kenya’s. South African commentators noted that Africa’s
ranking order — Pretoria first, Cairo second — was not affected. Congolese officials, who had
been preparing for a victory lap on fifth place, suddenly have less to celebrate.
The global picture matters too. Credit rating agencies are now reviewing their Ethiopia files. A
larger measured economy makes some debt metrics look better, but it also raises questions about
data reliability — rebases that result in a 60% jump almost always do. Analysts at major banks
are expected to issue updated country notes within the week.
For ordinary Ethiopians, the rebase changes nothing about the price of teff or the cost of fuel in
Addis. Inflation remains stubbornly high, foreign currency is scarce, and the aftershocks of the
Tigray conflict still shape daily life in parts of the north. But for a government trying to tell a
story of transformation, the new $210.7 billion number is a statistical megaphone.
Expect the rebase to be cited in every Ethiopian government speech, every investment pitch, and
every donor meeting for the next year. The real test, though, is whether the private-sector activity
it describes — digital finance, modern trade, services — keeps growing fast enough to justify the
number. Statisticians have given Ethiopia a headline. Entrepreneurs will have to earn it.
What comes next: an IMF program review in the coming weeks, a sovereign bond market
watching nervously, and a quiet race across Africa to see which country rebases its own accounts
and climbs the table next.
