Ethiopia: Economy#

Ethiopia has grown at a rate between 8% and 11% annually for more than a decade and the country is the fifth-fastest growing economy among the 188 IMF member countries. This growth has been driven by sustained progress in the agricultural and service sectors. Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of the Scandinavian countries. Yet despite progress toward eliminating extreme poverty, Ethiopia remains one of the poorest countries in the world, due both to rapid population growth and a low starting base. Changes in rainfall associated with world-wide weather patterns resulted in the worst drought in thirty years in 2015/2016, creating food insecurity for millions of Ethiopians.

Almost 80% of Ethiopia’s population is still employed in the agricultural sector, but services have surpassed agriculture as the principal source of GDP. Under Ethiopia's constitution, the state owns all land and provides long-term leases to tenants. Since 2005, the Ethiopian government has introduced a system to register traditional land use rights and provide certificates documenting these rights. Initial surveys show that land-use certificates have significantly increased the willingness of farmers to invest in improvements on their land, from terracing to irrigation. However, title rights in urban areas, particularly Addis Ababa, are poorly regulated, and subject to corruption.

Ethiopia’s export earnings are led by the services sector - primarily Ethiopian airlines - followed by several commodities. While coffee remains the largest foreign exchange earner, Ethiopia is diversifying exports and commodities such as gold, sesame, khat, livestock and horticulture products are becoming increasingly important. Manufacturing represents less than 8% of total exports. The banking, insurance, telecommunications, and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted significant foreign investment in textiles, leather, commercial agriculture, and light manufacturing.

Ethiopia remains a one-party state with a planned economy. In the fall of 2015, the government finalized and published the current 2016-2020 five year plan, known as the Growth and Transformation Plan (GTP II). GTP II emphasizes developing manufactures in sectors where Ethiopia has a comparative advantage in exporting, including textiles and garments, leather goods, and processed agricultural products. New infrastructure projects are to include power production and distribution, roads, rails, airports and industrial parks. To support industrialization, Ethiopia plans to increase power generation by 8,320 MW, up from an installed capacity of 2,000 MW, by building three more major dams and expanding to other sources of renewable energy. Construction is underway on an electric railway network that will connect Ethiopia to all its neighbors, with a link to the Port of Djibouti already finished and partially functioning. A tripling of capacity at the international airport in Addis Ababa to 25 million passengers will be completed in 2017, while construction of a completely new airport is being planned by 2025. Meanwhile, the domestic airport network has expanded to nineteen airports in a country where mountains and deserts make developing and maintaining a road network challenging. Despite difficult topography, more than a hundred thousand kilometers of roads have been built, connecting previously isolated regions.

Economic Facts#

GDP (purchasing power parity)$174.7 billion (2016 est.)
$164.1 billion (2015 est.)
$148.9 billion (2014 est.)
note: data are in 2016 dollars
GDP (official exchange rate)$69.22 billion (2015 est.)
GDP - real growth rate6.5% (2016 est.)
10.2% (2015 est.)
10.3% (2014 est.)
GDP - per capita (PPP)$1,900 (2016 est.)
$1,800 (2015 est.)
$1,700 (2014 est.)
note: data are in 2016 dollars
Gross national saving29% of GDP (2016 est.)
31.7% of GDP (2015 est.)
30.2% of GDP (2014 est.)
GDP - composition, by end usehousehold consumption: 65.9%
government consumption: 10.2%
investment in fixed capital: 37.6%
investment in inventories: -0.1%
exports of goods and services: 8.7%
imports of goods and services: -22.3% (2016 est.)
GDP - composition, by sector of originagriculture: 36.2%
industry: 17%
services: 46.8% (2016 est.)
Agriculture - productscereals, coffee, oilseed, cotton, sugarcane, vegetables, khat, cut flowers; hides, cattle, sheep, goats; fish
Industriesfood processing, beverages, textiles, leather, garments, chemicals, metals processing, cement
Industrial production growth rate9% (2016 est.)
Labor force50.97 million (2016 est.)
Labor force - by occupationagriculture: 85%
industry: 5%
services: 10% (2009 est.)
Unemployment rate17.5% (2012 est.)
18% (2011 est.)
Population below poverty line29.6% (2014 est.)
Household income or consumption by percentage sharelowest 10%: 4.1%
highest 10%: 25.6% (2005)
Distribution of family income - Gini index33 (2011)
30 (2000)
Budgetrevenues: $10.07 billion
expenditures: $11.85 billion (2016 est.)
Taxes and other revenues14.6% of GDP (2016 est.)
Budget surplus (+) or deficit (-)-2.6% of GDP (2016 est.)
Public debt54.2% of GDP (2016 est.)
49.6% of GDP (2015 est.)
note: official data cover central government debt, including debt instruments issued (or owned) by government entities other than the treasury and treasury debt owned by foreign entities; the data exclude debt issued by subnational entities, as well as intragov
Fiscal year8 July - 7 July
Inflation rate (consumer prices)9.1% (2016 est.)
10.1% (2015 est.)
Central bank discount rateNA%
Commercial bank prime lending rate12.2% (31 December 2016 est.)
11.5% (31 December 2015 est.)
Stock of narrow money$14.43 billion (31 December 2016 est.)
$11.97 billion (31 December 2015 est.)
Stock of broad money$28 billion (31 December 2016 est.)
$24.4 billion (31 December 2015 est.)
Stock of domestic credit$36.33 billion (31 December 2016 est.)
$28.41 billion (31 December 2015 est.)
Market value of publicly traded shares$NA
Current account balance-$7.427 billion (2016 est.)
-$7.392 billion (2015 est.)
Exports$2.932 billion (2016 est.)
$2.935 billion (2015 est.)
Exports - commoditiescoffee (27%, by value), oilseeds (17%), edible vegetables including khat (17%), gold (13%), flowers (7%), live animals (7%), raw leather products (3%), meat products (3%)
Exports - partnersSwitzerland 14.3%, China 11.7%, US 9.5%, Netherlands 8.8%, Saudi Arabia 5.9%, Germany 5.7% (2015)
Imports$14.7 billion (2016 est.)
$15.87 billion (2015 est.)
Imports - commoditiesmachinery and aircraft (14%, by value), metal and metal products, (14%), electrical materials, (13%), petroleum products (12%), motor vehicles, (10%), chemicals and fertilizers (4%)
Imports - partnersChina 20.4%, US 9.2%, Saudi Arabia 6.5%, India 4.5% (2015)
Reserves of foreign exchange and gold$2.956 billion (31 December 2016 est.)
$3.113 billion (31 December 2015 est.)
Debt - external$22.49 billion (31 December 2016 est.)
$19.04 billion (31 December 2015 est.)
Exchange ratesbirr (ETB) per US dollar -
23.25 (2016 est.)
21.55 (2015 est.)
21.55 (2014 est.)
19.8 (2013 est.)
17.71 (2012 est.)