Growth: Ethiopia, World Champion

Despite drought and falling commodity prices, Ethiopia has been the fastest growing country in the world.
BY LE POINT AFRIQUE
Published on 29/09/2017 with 18:18 – Modified 01/10/2017 with 13:31| The Africa Point
According to the June 2017 edition of the Global Economic Prospects of the World Bank, Ethiopia, with 95 million inhabitants, would be the country with the fastest economic growth in the world in 2017. Estimated at 8.3% , the increase in the GDP of the East African giant during this year is three times higher than the world average, which amounts to 2.7%. “The Ethiopian economy has shown great resilience in 2016-2017, in a context of continuing weakness in world prices of Ethiopia’s major export commodities and the re-emergence of drought situations in several parts of the country . Gross domestic product (GDP) is expected to grow by 9% in fiscal year 2016-2017, “said the IMF team leader.
Ethiopia in resilience mode
Between 2004 and 2016, Ethiopia’s average annual growth was 10.5%. The International Monetary Fund (IMF) commended the Ethiopian economy for its strong resistance this year in the face of continuing weakness in world prices for Ethiopia’s major export products and the drought that hit several parts of the country. country. In an evaluation report released on September 27, the team commended the Ethiopian economy for ensuring this solid resistance despite the consecutive drought periods that caused devastation in several parts of this East African country . It must be recognized that the government has shown a strong will to respond to these immense challenges.

“Government interventions to mitigate the social impact of drought, in collaboration with development partners, have been deployed at the right time and effectively, thus limiting the human cost,” said Escolano. The prudent execution of the budget resulted in a budget deficit lower than expected, estimated at 2.5% of GDP, said this assessment. The IMF also advised the Ethiopian government to pursue monetary tightening in addition to its strict fiscal policy.

As part of its assessment, the IMF estimated that medium-term growth prospects supported by significant private investment, completion of major infrastructure projects and increased productivity were favorable and the sign of a consolidation of export industries.

The hardest remains to come …
However, the IMF official pointed out that East African exports continued to stagnate due to weak global commodity markets and delays in the implementation of major associated projects. Extensive use of public-private partnerships, private concessions and privatization products, in line with government policies, will help preserve public resources while contributing to the development of the private sector.

“The positive sentiment of investors towards Ethiopia currently could be further enhanced by reforms to improve the business climate. A more flexible exchange rate would enhance competitiveness. Improving economic statistics would support political decision-making and investor confidence, “the report said. For the ultimate goal of the country is to achieve industrialization. For the time being, industry and services accounted for 14.7% and 43.4% of GDP in 2014, respectively.

In the context of the Article 4 consultations, the IMF seeks to assess the economic situation of each member country concerned in order to help it anticipate future financial challenges.
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