Country Economic Brief - February 2014 Issue

19 May 2014

Report Summary

The Ethiopian economy has experienced impressive growth performance over the last decade with average GDP growth rate of 11 %, which is about double of the average growth for Sub Saharan Africa. 2012/13 was markedly successful in terms of maintaining macroeconomic stability and fiscal management as witnessed by inflation falling to a single digit, which had been a major challenge in the past two years. The medium term outlook shows that the growth will continue albeit at a slow pace than the previous years.

To attain the national vision of achieving the MDGs by 2015 and becoming a middle-income country by 2025, the country faces some challenges that could impede on the growth and transformation agendas.These challenges include:
• A possible financial risk associated with growing stock of external debt (at 24.3% of GDP for 2012/13), foreign exchange shortage and limited financing options for the growth and transformation plan.
• Low levels of domestic savings and financial intermediation aggravated by negative real interest rates which continue to act as a disincentive to savings mobilization while hampering credit access.
• A decline in export value due to vulnerability to international commodity price fluctuations and few commodity choices for export market.
• The need to nurture a competitive private sector to drive the growth and transformation agenda.

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