Economy

Dearer Oil, Cheaper Coffee Threaten Ethiopia’s Recovery

AI SUMMARY

Surging global energy prices and a drop in beverage prices threaten Ethiopia's economic recovery, trade balance, and recent currency reforms.

Global energy prices jumped by 25.7 percent in September, led by a 21.2 percent increase in crude oil.
Global food prices rose by 3.8 percent in September, while the beverage price index fell by 4.6 percent.
Ethiopia imports all its petroleum and earns a large portion of its hard currency from agricultural exports, leaving it vulnerable to shifts in terms of trade.
The World Bank's Pink Sheet figures serve as global benchmarks rather than the exact prices Ethiopia pays or receives.
A country spending 3 billion US dollars annually on fuel would face an additional 600 million US dollars in costs if prices rose by 20 percent.
Higher diesel prices increase the costs of transporting grain, moving goods between industrial towns, and hauling imports from Djibouti.
Coffee earned approximately 3.1 billion US dollars in the 2025/26 fiscal year, representing an increase from 2.65 billion US dollars the previous year.
Gold and coffee together accounted for nearly four-fifths of Ethiopia's merchandise export earnings in the 2025/26 fiscal year.
Since July 2024, Ethiopia has allowed market forces to play a larger role in foreign exchange pricing and allocation to narrow the gap with the black market.