According to the International Monetary Fund’s October 2026 World Economic Outlook, Kenya has moved ahead of Ethiopia as the region’s biggest economy when measured in nominal US‑dollar terms.

The shift is attributed largely to the relative strength of the Kenyan shilling against the US dollar, which boosted the dollar value of Kenya’s output despite modest real‑growth rates.

Ethiopia’s economy continues to expand faster in real terms, with the IMF estimating a 9.2 % real‑GDP growth in 2025 compared with Kenya’s 4.6 % for the same year.

The IMF notes that Kenya’s nominal GDP rose about 13.7 % in 2025, whereas Ethiopia’s dollar‑denominated GDP fell sharply after the birr’s depreciation following a July 2024 move to a market‑determined exchange rate.

Per‑capita nominal GDP in 2026 is estimated at roughly $2,790 (Sh362,281) for Kenya and $1,130 (Sh146,730) for Ethiopia, highlighting the size difference despite Ethiopia’s faster output growth.

Why exchange‑rate movements matter

Nominal GDP reflects the market value of output at current exchange rates, so a currency’s appreciation can raise a country’s dollar‑denominated size even without a surge in domestic production.

Conversely, a depreciation can cause a country’s dollar‑GDP to drop sharply, as seen in Ethiopia after its birr weakened, despite ongoing real‑GDP expansion.

Implications for households and businesses

However, the IMF projects consumer‑price inflation of about 6 % in Kenya for 2026, compared with 11.7 % in Ethiopia, indicating that price pressures remain a concern for household purchasing power.