The strong growth of Ethiopia’s economy in 2014/15, estimated at 10.2%, is expected to continue in 2016 and 2017, while public investment is expected to ease infrastructure bottlenecks and bolster economic structural transformation.
Ethiopia has experienced double-digit economic growth, averaging 10.8% since 2005, which has mainly been underpinned by public-sector-led development. Real gross domestic product (GDP) is estimated to have grown by 10.2% in fiscal year 2014/15. The agriculture, services and industry sectors accounted for 38.8%, 46.6% and 15.2% of real GDP, respectively.
Ethiopia, having registered high economic growth since 2005 at an average 10.8% per annum, stands out as one of the fastest growing economies in the world. In 2014/15, real GDP grew by 10.2%. While the share of agriculture in the GDP declined over ten years from 47% in 2004/05 to 39% in 2014/15, that of the services sector increased from 40% to 46% in the same period.
Agriculture remains the leading sector in terms of contribution to the country’s overall economy. It is a major source of food for domestic consumption, of raw materials for the domestic manufacturing industries and of primary commodities for export. Moreover, the sector contributes 73% of employment, and supplies 70% of the raw-material requirements of local industries. Livestock and livestock products, as well as food crops, were the leading contributors to agriculture-sector growth in 2014/15. Ethiopia’s agriculture depends highly on traditional farming methods and a rain-fed farming system, and is vulnerable to environmental and climate-related impacts.
The average value of export earnings between 2011/12 and 2014/15 was USD 3.1 billion. In 2014/15, the value of merchandise exports totalled USD 3 billion, posting an 8.5% decline year-on-year. This was due to a fall in the volume of exports (such as coffee and pulses) and decreases in gold, oilseeds and pulses prices.
Imports have increased substantially since 2011/12. The annual merchandise-import bill, largely driven by capital goods, increased from USD 11 billion in 2011/12 to USD 16.6 billion in 2014/15, thereby widening the current-account deficit.
Ethiopia’s exports continued to be dominated by primary commodities, as export diversification is still at a very early stage, and imports were dominated by capital goods, arising from growing demand for investment in infrastructure development. In 2014/15, Ethiopia’s exports were valued at USD 3 billion, 8.5% less than in the previous fiscal year. This decline in the values of exports came mainly from drops in the export prices of gold, coffee and oilseeds, amongst other export products.
In the same period, imports were increased by 20.4% to USD 16.5 billion compared to the preceding year. The major imports were capital goods (41.9%), consumer goods (27.4%), semifinished goods (15.7%) and fuel (18.5%).
Ethiopia is considered as having thick borders. In the World Bank report, Doing Business 2016, the country was ranked 166th out of 189 economies in the area of trading across borders, one place down from the previous year. In addition, measures to facilitate easy movement of persons and labour such as issuance of a common means of identification at the regional level, easing of visa requirements and the establishment of efficient immigration offices at border posts, with the required human and organisational capacities, are partially not yet applied.