Another African country threatens South Africa’s economic dominance

Addis Ababa – Ethiopia has emerged as Africa’s fifth-largest economy after a major overhaul of its national accounts increased the measured size of its economy by nearly 60%, putting further pressure on South Africa’s position among the continent’s economic giants.

According to BusinessTech, Ethiopia’s gross domestic product (GDP) reached $210.7 billion in the fiscal year ended July 2026 after the country rebased its national accounts to reflect newer sectors of the economy, including digital finance and services.

The revised figure represents a sharp increase from the previous estimates. Ethiopia’s GDP for 2024/25 was recalculated at $201.4 billion, 59% higher than the previous estimate.

Finance Minister Fitsum Assefa said Ethiopia’s previous 2015/16 base year “no longer captured the economy’s structural transformation, sectoral expansion and emerging activities such as digital finance and services.”

At a high-level national forum organised by the Ministry of National Strategy, Ethiopia today launched its rebased GDP series, with 2017 EFY (2024/25) as the new base year.

While Ethiopia has published official GDP figures since 1960, the previous series, based on 2008 EFY (2015/16), no longer captured the economy’s structural transformation, sectoral expansion and emerging activities such as digital finance and services.

The new series draws on recent national Agriculture and Economic Establishment Censuses, the Integrated Household Survey and administrative records. For the first time, it also incorporates data from federal and regional state-owned enterprises and non-profit institutions serving households (NPISH).

2017 EFY GDP: ETB 24.03 trillion (USD 201.4 billion). 59.2% larger than previously estimated. 2018 EFY GDP: USD 210.7 billion. Ethiopia now ranks as Africa’s 5th and Sub-Saharan Africa’s 3rd largest economy.

The rebasing provides internationally comparable statistics, strengthens investor, rating agency and development partner confidence, and offers a more robust evidence base for fiscal policy, budgeting and development planning.

Congratulations to the leaders and experts whose dedication and hard work over the past year made this nationally significant achievement possible.

— Fitsum Assefa Adela (@FitsumAdela) November 4, 2026

The rebasing incorporated information from a recent agriculture census, household surveys, as well as state-owned enterprises and non-profit institutions.

The revised figures show that services now account for almost 36% of Ethiopia’s economy, followed by agriculture at 32% and industry at 30%. The country is also forecasting economic growth of 10.2% in the current fiscal year, supported by reforms aimed at attracting foreign investment and opening sectors such as telecommunications and banking.

Reuters reported that the rebasing increased Ethiopia’s estimated economy to about $201 billion for 2024/25, describing the statistical overhaul as potentially significant for the country’s debt indicators as it works to complete its debt restructuring.

However, the bigger GDP figure does not mean Ethiopia suddenly has more money available to repay its creditors.

Oxford Economics economist Alexander Venter, quoted by BusinessTech, cautioned that “outstanding debt, servicing costs, and foreign-currency financing requirements remain unchanged.”

The significance of the rebasing is therefore largely statistical and economic: a larger GDP denominator automatically reduces debt-to-GDP ratios, potentially improving some headline measures of debt sustainability.

IntelliNews noted that Ethiopia’s new figures put its 2025/26 economy at $210.7 billion, compared with an earlier IMF projection of $127.1 billion. The publication also highlighted that the revision does not reduce Ethiopia’s actual debt obligations.

The development comes as Ethiopia seeks to attract more foreign investment through economic reforms, including the liberalisation of its currency and the opening of previously restricted sectors.

Ethiopia’s rise also comes amid growing competition for economic and investment leadership on the continent. Reuters’ Africa Financial Markets report found that South Africa remained Africa’s leading financial market in 2026, followed by Mauritius and Namibia.

At the same time, South Africa itself recently rebased its national accounts, a move that also changed the measurement of its economy and debt ratios.

The latest Ethiopian figures therefore do not mean South Africa has immediately lost its position as Africa’s largest economy. Rather, they highlight how rapidly the continent’s economic rankings can change when countries update outdated national accounts and capture previously undercounted sectors.

Follow African Insider on Facebook, X and Instagram

For more African news, visit Africaninsider.com