Is the new conflict strangling Ethiopia's economic growth?

Ethiopia's economy is projected to grow significantly, but renewed conflicts in the north threaten investments and financial stability. The IMF forecasts a growth rate of 9.2% for 2025/26, yet ongoing violence and reconstruction costs could hinder recovery. The Tigray conflict left extensive damage, with losses exceeding $22.6 billion. Despite growth in sectors like agriculture and mining, inflation remains a concern, with predictions of 11.7% for 2025/26. Increased military spending could divert funds from development, exacerbating economic challenges. Agriculture and tourism are particularly vulnerable to conflict impacts, potentially leading to higher prices and reduced incomes for farmers. Investors may reconsider Ethiopia due to instability, although no significant capital flight has been reported yet.