IMF Data Shows Kenya Surpasses Ethiopia in Nominal GDP Race Amid Currency Shifts

Addis Ababa — Kenya has overtaken Ethiopia as Eastern Africa’s largest economy when measured by nominal gross domestic product (GDP) in U.S. dollar terms, according to the International Monetary Fund’s (IMF) October 2026 World Economic Outlook (WEO). This shift is primarily due to exchange-rate movements rather than faster real economic growth.

The IMF’s estimates reveal that Ethiopia’s economy continues to expand more rapidly in real terms, despite the depreciation of the birr reducing the dollar value of its output. Kenya’s comparatively stronger currency performance, combined with ongoing economic growth, boosted the value of its economy when measured in U.S. dollars.

According to the IMF’s October 2026 WEO estimates, Ethiopia’s real GDP grew by 9.2% in 2025, compared with 4.6% in Kenya. The Fund projects Ethiopia’s economy to expand by 9.2% in 2026 and 7.8% in 2027, while Kenya’s growth is projected at 4.5% and 4.7%, respectively.

These figures highlight the important distinction between nominal GDP, which values economic output at prevailing market exchange rates, and real GDP growth, which measures changes in output after accounting for price changes. A country’s dollar-denominated GDP can decline sharply following currency depreciation, even when domestic production is increasing.

Ethiopia’s currency shift followed the government’s July 2024 move toward a more market-determined exchange-rate system, a key part of its economic reform program supported by an approximately $3.4 billion IMF Extended Credit Facility. The resulting depreciation of the birr significantly reduced the dollar value of the country’s economic output.

Kenya’s economy, meanwhile, benefited from a stronger shilling, increasing the dollar valuation of its output. The IMF estimates show that Kenya’s nominal GDP in U.S. dollar terms rose by about 13.7% in 2025, while Ethiopia’s dollar-denominated GDP fell sharply from its 2024 level.

The change in ranking reflects the combined effects of economic growth, inflation, and exchange-rate movements on the dollar value of each economy.

The IMF estimates nominal GDP per capita at about $1,130 in Ethiopia and $2,790 in Kenya in 2026, illustrating the gap between the total size of an economy and output per person.

Inflation remains a concern. The IMF projects average consumer price inflation of approximately 11.7% in Ethiopia in 2026, compared with about 6% in Kenya. Persistent price pressures, alongside exchange-rate changes, affect households’ purchasing power and the cost of imports.

Titled “Resilience Under Strain, Urgent Choices,” the IMF’s October 2026 WEO projects Sub-Saharan Africa’s economic growth at 4.5% in both 2026 and 2027. It also warns that high debt-servicing costs, limited foreign-exchange reserves, and declining aid are constraining governments’ ability to respond to economic shocks.

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