Ethiopia’s Economy is in A critical State, Facing Severe Meltdown
By Nama Nekemto
June 22, 2025
The Ethiopian economy is experiencing a severe and rapidly deteriorating crisis. The decline is no longer merely concerning; it has reached a critical juncture, threatening widespread economic instability.
The nation is facing a rapidly escalating crisis, manifesting across multiple critical sectors. Economic instability, coupled with significant security concerns and a deteriorating political landscape, paints a concerning picture of a state teetering on the brink of collapse. The erosion of governmental authority and capacity is undeniable, affecting the lives of ordinary citizens in profound ways.
A substantial number of investors have suspended their operations!
The current economic and security challenges, exacerbated by the ongoing conflict, have significantly dampened foreign investor confidence in Ethiopia. This has manifested in a concerning trend: a substantial number of investors have suspended operations relocating their assets to other countries. The closure of numerous manufacturing plants serves as a stark illustration of capital flight. The resulting economic consequences are far-reaching. The lack of investor confidence not only hinders economic growth but also threatens the livelihoods of countless Ethiopians employed in these affected industries.
Plight of local investors
The domestic private investors are also facing significant challenges, mirroring the difficulties experienced by many businesses owned by foreign investors. These challenges stem from a confluence of factors, including persistent security concerns and a critical shortage of imported inputs. Consequently, numerous businesses have either ceased production entirely or have experienced a drastic reduction in output.
Government allocation of limited funds on military weapons and unproductive projects
The government’s allocation of national revenue – derived from taxation, loans, and foreign aid – is being mismanaged. Significant funds appear to be diverted towards purchase of military weapons and unproductive projects, hindering the nation’s economic growth potential. This mismanagement represents a serious impediment to development and has far-reaching consequences for the country’s economic stability and the well-being of its citizens.
Country’s young fleeing or engaged in self destructive civil war
The rising unemployment rate in the country has reached a critical stage. A multitude of factors contribute to this alarming trend, leaving a significant portion of the young population feeling disillusioned and without prospects. This isn’t merely a matter of statistics; it represents a profound erosion of hope and opportunity for a generation poised to shape the future.
The desperation of many young people is driving them to perilous journeys, with migration becoming their only perceived option. They are risking their lives traversing dangerous land and sea routes in a desperate search for a better future, often facing unimaginable hardship and uncertainty along the way. The plight of millions of young people forced to flee their homelands due to oppressive regimes is a heartbreaking reality.
On the contrary, Instead of accepting exile as their only option, millions of young people are bravely choosing to remain in their own country and fight for justice and democracy. Their struggle is a testament to their unwavering commitment to freedom and a better future. These courageous young men and women are sacrificing their precious lives, facing immense risks and hardships, to challenge tyranny and build a more equitable society.
Assessment of the other half of Ethiopia’s youth, we find a significant number of young people being forcibly conscripted into the regime’s military. The reports received paint a grim picture of widespread human rights abuses perpetrated by these new recruits. These abuses, far from being isolated incidents, appear to be systematic and deeply ingrained within the ruling regime’s operations. There is credible evidence suggesting that government forces are actively engaged in the killing and torture of their own citizens. Furthermore, these actions are accompanied by widespread looting and the deliberate destruction of vital infrastructure crucial for the country’s development. This systematic dismantling of essential services exacerbates the suffering of the population and undermines any possibility of long-term economic stability and progress.
A dangerous cycle of social instability and economic stagnation
The Abiy Ahmed administration’s current economic trajectory is deeply concerning. Instead of addressing the nation’s multifaceted challenges, its policies seem to be exacerbating existing crises and creating new ones, leading to a dangerous cycle of instability and stagnation. The government’s actions have generated widespread economic hardship, fueled social divisions, and undermined the rule of law.
This unsustainable path threatens Ethiopia’s future prosperity and stability. A fundamental shift in approach is urgently needed to address the underlying causes of the current predicament, foster inclusive governance, peaceful resolution of the civil war and prioritize the well-being of all Ethiopian citizens. The international community must advocate for constructive dialogue, meaningful reforms, and a commitment to sustainable development that benefits all segments of society. Failure to do so will only deepen the existing crises and further imperil Ethiopia’s recovery from its economic meltdown.
https://borkena.com/2025/06/22/ethiopia ... -meltdown/