Ethiopia Loses East Africa’s Largest Economy Title

Ethiopia has lost the title of East Africa's largest economy for 2025, falling $24 billion behind Kenya, which has reclaimed the region's top economic position for the first time in five years, according to the International Monetary Fund's latest world economic outlook.

Development analysts attribute Ethiopia's weakened investment climate to the ongoing Tigray conflict, which has disrupted the country's economic stability. Ethiopian Prime Minister Abiy Ahmed has faced challenges in managing the crisis since taking office in 2018.

The conflict escalated in late 2020 when Tigray held unauthorized regional elections, sparking a civil war in November 2020. Although a peace deal paused the war, internal disputes and leadership rifts led to renewed conflict in early and mid-2026.