The World Bank has a longstanding strong partnership with Ethiopia, working together to advance the country’s vision for sustainable growth and inclusive development. Progress in job creation and improved governance will be needed to ensure that growth is equitable across society. Achieving these objectives will require sustaining macroeconomic and structural reforms to reduce the state’s dominance of the economy, increasing trade integration, and expanding opportunities for private sector growth and job creation. Also needed, reducing the incidence of conflict, not least as the related displacement, loss of livelihoods, and human capital amplifies vulnerability to climate and other shocks that Ethiopia is exposed to. Also key is addressing food insecurity, which is growing due to adverse weather events, reliance on rainfed agriculture, locust invasion, conflict, and global conditions leading to inflation of food prices.

The country’s growing workforce (roughly 2 million people reaching working age per year) puts pressure on the absorption capacity of the labor market, and necessitates improving current jobs, while creating sufficient new jobs.

Ethiopia faces growing risks to its development due to climate change, as highlighted in the 2024 Ethiopia Country Climate and Development Report (CCDR). Annual average losses to gross domestic product (GDP) are expected to range between 1-1.5% of GDP and rise to 5% by the 2040s, potentially pushing millions more Ethiopians into poverty (press release).

The analysis also points to opportunities for growth and increasing prosperity from climate-informed development policies. Ethiopia can shift from being a net importer of agricultural commodities to generating surpluses of as much as 20% (relative to domestic demand), with climate change, especially under potentially warmer and wetter conditions, increasing these surpluses to 25%.

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