Economy

Ethiopia’s Missing Middle: Is the Nation’s Resilient Middle Class Fading Away?

The Reporter Magazine · 3 hours ago · Read the Full Story on The Reporter Magazine

AI SUMMARY

Despite decades of strong headline GDP growth, Ethiopia faces a deep structural paradox where millions of urban households, including formal professionals, experience severe financial fragility and eroding purchasing power.

Real GDP expanded at an average annual rate of approximately 10.5 percent between 2004 and 2018, driving national output from USD18.7 billion in 2003 to nearly USD90 billion by 2019.
A 39-year-old Addis Ababa banker saw his nominal salary rise from 17,000 to 40,000 ETB over five years, yet his real purchasing power has plummeted due to surging grocery, school, and healthcare costs.
Economist Mussie Delelegn argues that GNI thresholds mask structural inequality and that low-income countries cannot maintain a substantial middle-income population.
Business analyst Kebour Ghenna notes that Ethiopia lacks a genuine middle-income economy characterized by high-productivity formal employment, suffering instead from jobless growth.
African Development Bank metrics indicate that only 6 to 14 percent of Ethiopia's population belongs to a relatively stable middle class, while the vast majority remain in a vulnerable floating class.
Conservative estimates show the proportion of Ethiopians living in extreme poverty below the USD3.00-a-day line increased from 33 percent in 2015/16 to 43 percent by 2025/26.
Multidimensional poverty in Ethiopia rose from 68 percent in 2019 to 72 percent in 2024, affecting approximately 86 million citizens.
In 2024, Ethiopia recorded USD4.5 billion in merchandise export earnings against USD21.5 billion in imports, resulting in a record trade deficit of USD17 billion.
Experts recommend four structural reforms: agrarian transformation, labor-intensive industrialization, strengthening institutional productive capacities, and restoring political stability and policy predictability.

Read the Full Story on The Reporter Magazine

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