Ethiopia Rebased GDP Reveals Larger Economy, New Challenges

Ethiopia has revised its gross domestic product (GDP) measurement, unveiling a larger economy than previously reported. The country's newly rebased GDP reached 24.03 trillion birr, equivalent to $201.42 billion, in the 2024/25 fiscal year. This represents a 59.21% increase over the previous estimate. The revision captures activities that were previously underrepresented, including digital financial services, ride-sharing platforms, and large solar installations.

The rebasing exercise, which replaces 2015/16 with 2024/25 as the base year, added approximately 8.94 trillion birr, or $74.9 billion, to the measured value of the 2024/25 economy. National Strategy Minister Bereket Fesehatsion stated that the government intends to repeat the rebasing exercise every five years, aligning with international statistical practice. This move aims to provide a more comprehensive picture of Ethiopia's economic structure and productive capacity.

The revised GDP framework shows that the economy grew further to 31.86 trillion birr, or $210.7 billion, in 2025/26. However, a larger measured economy does not necessarily mean that Ethiopia experienced an equivalent increase in actual production overnight. GDP rebasing is a statistical exercise that improves how economic activity is recorded, revealing previously undercounted output without creating new businesses or increasing household incomes.

The distinction between statistical revisions and actual economic growth is crucial, particularly as Ethiopia navigates significant fiscal and external financing pressures. The country remains in debt distress and is working through a restructuring process under the G20 Common Framework. A larger GDP denominator can make debt-to-GDP and tax-to-GDP ratios appear lower, even when the amount of debt owed and revenue collected remain unchanged.

Ethiopia's Eurobond restructuring illustrates the challenge. In August 2026, holders of its $1 billion Eurobond approved a preliminary agreement on restructuring terms reached with the government in June. The Official Creditor Committee assessed the agreement as consistent with the Comparability of Treatment principle, but implementation remains subject to finalisation of non-financial terms and documentation.

The GDP revision may influence creditor discussions, but it does not resolve underlying financing pressures. Tax collection presents a similar concern, as the IMF's previous programme projections placed Ethiopia's tax-to-GDP ratio at approximately 9.1% for 2025/26 under the earlier national accounts framework. When measured against the larger rebased GDP estimate, the resulting ratio is considerably lower.

The government argues that more accurate economic statistics could improve credit assessments, reduce risk premiums on future international borrowing, and strengthen foreign direct investment. Ethiopia's experience reflects a broader African effort to modernise national economic measurement, with Nigeria, Kenya, and South Africa also undertaking GDP rebasing exercises to incorporate changing economic activities and improve national accounts accuracy.

Key points

• Ethiopia's rebased GDP shows a 59.21% increase to $201.42 billion for 2024/25.
• The revision captures previously underrepresented sectors, including digital financial services and ride-sharing platforms.
• A larger GDP denominator can make debt-to-GDP and tax-to-GDP ratios appear lower, even when debt owed and revenue collected remain unchanged.