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የፕላንና ልማት ኮሚሽን !

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Planning And Development Commission (PDC)

Planning and Development Commission
Volume 1, Issue 2 Volume 1,

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ECONOMIC DIGEST
"

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2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016

ETHIOPIA ECONOMIC DIGEST

ETHIOPIA

DECEMBER, 2019
November 2019
የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

የፕላንና ልማት ኮሚሽን

Planning & Development Commission (PDC)

ECONOMIC DIGEST
ETHIOPIA

ECONOMIC DIGEST-ETHIOPIA
 Page 1 of 11

የፕላንና ልማት ኮሚሽን

Planning & Development Commission (PDC)

የፕላንና ልማት ኮሚሽን

Planning and Development Commission (PDC)
Volume 1, Issue 2

Real GDP Growth (%)

CONTENTS
12

10

0
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2

PDC’s Vision ................................ 1 ECONOMIC DIGEST

ETHIOPIA

Economic Growth ....................... 2

November 2019

Inflation ....................................... 3
External Debt ............................. 4
Export ......................................... 5
FDI .............................................. 6
A Home-Grown
Economic Reform ....................... 7
References .................................. 8

i
ECONOMIC DIGEST-ETHIOPIA
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 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

PLANNING & DEVELOPMENT

COMMISSION (PDC)

Vision Mission Mandate

Be the center Ensure rapid The mandate

of excellence in structural of the
development economic Commission
planning, transformation is to prepare
monitoring and and five-year plans
evaluation by sustainable of national
2025. development development in
by guiding the framework
the economy of countrywide
through balanced
long and growth within
medium-term the context of
development a long-term
Plans. perspective
plan of fifteen
years, and
conduct
periodic
evaluation.

1
ECONOMIC DIGEST-ETHIOPIA
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 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

ECONOMIC GROWTH
The Ethiopian economy registered real GDP growth rate averaged 8.7 percent during
the first four years (2015/16-2018/19) of the GTP II implementation period. Agriculture,
industry, and service sectors had 4.1%, 16.6%, and 8.9% annual average growth rates
respectively. Similarly, the Ethiopian economy has registered a growth rate of 9.0
percent in real terms in 2018/19 FY against the 11.0 percent target. During the same
period, agriculture, industry, and services grew by 3.8 percent, 12.6 percent, and 11.0
percent respectively. Within the industrial sector, the manufacturing sub-sector grew
by 7.7 percent and the construction sub-sector grew by 15.0 percent. The contribution
of agriculture, industry, and services to the overall GDP growth rate has stood at 1.3
percent, 3.1 percent, and 4.3 percent, respectively.

In 2018, global economic growth has slightly slow down as a result of a slowdown
economic growth in emerging and developing countries and is further expected to slip
down in 2019. On the other hand, in Sub Saharan Africa (SSA), growth has improved
marginally in 2018 as compared to 2017 and is expected to maintain the 2018 growth
rate in 2019. The 9.0 percent economic growth that Ethiopia has registered in 2018/19
is well above from both the global and sub-regional projections.

World and Regional Real GDP Growth Rate (%)

2017 2018 2019 Actual 2018/19

projections ***PDC
World 3.8 3.6 3.0
Region
Emerging Market and Developing Economies 4.8 4.5 3.9
Euro area 2.5 1.5 1.6
Sub-Saharan Africa 3.0 3.2 3.2
Countries
United States 2.4 3.0 2.5
Germany 2.5 1.8 1.9
Japan 1.9 0.6 1.1
China 6.8 6.6 6.1
India 7.2 6.8 6.1
Kenya 4.9 6.3 5.6
Ethiopia 10.1 7.7 7.4 9.0

Source: IMF 2019 and ***PDC

2
ECONOMIC DIGEST-ETHIOPIA
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 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)
Page 5 of 11

The country’s robust economic growth sustained over the past 16 years has
Theimprovements
led to country’s robust economic
in income growth sustainedand
inequality overpoverty
the past 16 years has led
reduction. to improvements
The average
annual per capita
in income income
inequality has increased
and poverty for average
reduction. The the past consecutive
annual years and
per capita income has
has increased
reached to USD 985 at current market prices in 2018/19. As a result, the poverty
for the past consecutive years and has reached to USD 985 at current market prices in 2018/19.
headcount ratio has declined to 23.5 percent in 2015/16, from 29.6 percent in
As a result, the poverty headcount ratio has declined to 23.5 percent in 2015/16, from 29.6
2010/11.
percent in 2010/11.

Sectors Contribution to Real GDP (%)

12.0 10.5 10.1

10.0 9.0
8.0 7.7
8.0

6.0

4.0

2.0

0.0
2014/15 2015/16 2016/17 2017/18 2018/19

Agriculture Industry Service RGDP

Source: PDC
Source: PDC
INFLATION
INFLATION
The general twelve months moving average Consumer Price Index (CPI) inflation rate stood at
13.6 percent in September 2019. The food and non-food inflation rates stood at 15.6 and 11.2
The general twelve months moving average Consumer Price Index (CPI) inflation
percent, respectively. On the other hand, the year-on-year general CPI inflation rate for
rate stood at 13.6 percent in September 2019. The food and non-food inflation
ratesSeptember
stood at2019
15.6amounted
and 11.2 to percent,
18.6 percent while food and
respectively. Onnon-food year-on-year
the other hand, theCPIyear-
inflation
rate stood
on-year at 23.3
general CPIpercent andrate
inflation 13.1for
percent, respectively.
September 2019According
amounted to the
to 2015/16 Household
18.6 percent
whileIncome
food Consumption
and non-food year-on-year
Expenditure Survey CPI inflation
(HICES), rateand
the food stood at 23.3
non-food percent
components of the
and consumers’
13.1 percent, respectively. According to the 2015/16 Household Income
basket account for 54% and 46%, respectively, of the total household consumption
Consumption Expenditure Survey (HICES), the food and non-food components
expenditure.
of the consumers’ basket account for 54% and 46%, respectively, of the total
household consumption expenditure.

3
ECONOMIC DIGEST-ETHIOPIA
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 Page 6 of 11 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

18.0 Monthly Inflation Rate

17.0
16.0
15.0
14.0
13.0
12.0
11.0
10.0

General Inflation Food Inflation Non-food inflation

Source:
Source: CSACSA

Ethiopia hashasbeen
Ethiopia been experiencing high
experiencing high inflationary
inflationary pressure
pressure as compared
as compared to a stable to a
inflation
stable inflation performance in the sub-regional and global environment. In
performance in the sub-regional and global environment. In 2019, inflation in advanced countries
2019, inflation in advanced countries is projected to decline. In Sub-Saharan
is projected to decline. In Sub-Saharan Africa, inflation is expected to remain close to the level it
Africa, inflation is expected to remain close to the level it was in 2018.
was in 2018.
Percent change of Annual Average Consumer Prices index
Percent change of Annual Average Consumer Prices index
Average 2011 2012 2013 2014 2015 2016 2017 2018 2019
2001-2010
Average 2011 2012 2013 2014 2015 2016 2017 Projection
2018 2019
Sub-Saharan Africa 9.9 9.3
2001-2010 9.2 6.5 6.4 6.9 10.8 10.9 8.5 Projection
8.4
Advanced Economies 2.0 2.7 2.0 1.4 1.4 0.3 0.8 1.7 2.0 1.5
Ethiopia Africa
Sub-Saharan 11.8 9.3 33.29.224.1 6.5 8.0 6.47.4 6.99.6 10.8
9.9 6.6 10.9
10.7 13.8 8.414.6
8.5
Source: UNCTAD
Advanced Economies 2.0 2.7 2.0 1.4 1.4 0.3 0.8 1.7 2.0 1.5
EXTERNAL DEBT
Ethiopia 11.8 33.2 24.1 8.0 7.4 9.6 6.6 10.7 13.8 14.6
§ The country’s total external public debt outstanding stood at 27.04 billion USD in
Source: UNCTAD
2018/19 from 25.77 billion USD in 2017/18, indicating an annual growth rate of 4.9
percent. Of the total public debt outstanding, the central government accounted for 59.0
EXTERNAL
percent DEBT
while the remaining 26.9 and 14.1 percent accounted for government-guaranteed
and non-guaranteed loans.
• The country’s total external public debt outstanding stood at 27.04 billion
USD in 2018/19 from 25.77 billion USD in 2017/18, indicating an annual
growth rate of 4.9 percent. Of the total public debt outstanding, the central
government accounted for 59.0 percent while the remaining 26.9 and 14.1
percent accounted for government-guaranteed and non-guaranteed loans.

4
ECONOMIC DIGEST-ETHIOPIA
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 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

Public Sector External Debt in billion USD

2015/16 2016/17 2017/18 2018/19

Total Disbursements 3.50 2.93 3.51 2.80
Central Government 1.74 1.54 1.82 1.54
Gov. Guaranteed 1.68 1.16 1.15 0.38
Non-Gov. Guaranteed 0.08 0.23 0.54 0.88
Total Debt Service 1.13 1.29 1.60 2.01
Central Government 0.26 0.29 0.36 0.39
Gov. Guaranteed 0.39 0.52 0.67 0.92
Non-Gov. Guaranteed 0.48 0.48 0.57 0.70
Total Outstanding 21.28 23.34 25.77 27.04
Central Government 11.58 12.98 14.74 15.95
Gov. Guaranteed 6.10 6.93 7.54 7.27
Non-Gov. Guaranteed 3.60 3.42 3.50 3.81

Source: MoF

MERCHANDISE EXPORT
Export earning was surpassed over the last year similar period.

• The total merchandise export and import stood at USD 2.7 billion and USD
15.1 billion, respectively, in 2018/19. Of the total merchandise exports, the
share of agriculture, industry, and mining amounted to 79.2%, 19.4%, and 1.4
%, respectively. Trade deficit in 2018/19 stood at USD 12.5 billion.

• During the first quarter of 2019/20 FY, the total merchandise export earnings
and import expenses stood at 722.8 Million USD and 3.8 billion USD,
respectively. During the first two months of 2019/20 FY, the share of export
partners: Asia, Europe, Africa, and America was 36.8%, 29.2%, 20.3%, and
11.8%, respectively.

5
ECONOMIC DIGEST-ETHIOPIA
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 Page 8 of 11
Share of merchandize export earnings by majorየፕላንና
commodities
ልማት ኮሚሽን
Planning & Development Commission (PDC)

Share of merchandize export earnings by major commodities

18%
32%

18% 13%
32%

13% 7%
16%
7% 7%
7%
16%
7% 7%

Coffee Oil Seeds Pulses T& Textile Products Flower Chat Others
Coffee Oil Seeds Pulses T& Textile Products Flower Chat Others
Source: NBE
Source: NBE
Source: NBE
Foreign
Foreign Direct
Direct Investment
Investment
Foreign
Ethiopia
Ethiopia is Direct
one
is one ofInvestment
of the countries that hasthat
the countries witnessed a rapid increase
has witnessed in FDI
a rapid inflows in
increase during
FDItheinflows
recent past, showing the growing integration of the economy into the globalized world. Against
recentispast,
Ethiopia one ofshowing the growing
the countries that has integration
witnessed ofathe economy
rapid increase into the inflows
in FDI globalized wo
this backdrop, a sharp decline in FDI inflows has been recorded
during the recent past, showing the growing integration of the economy into for the 2018/19 FY. The digest
this backdrop, a sharp decline in FDI inflows has been recorded for the 2018/19 FY
thehas explored if world.
globalized a similarAgainst
decline inthisFDIbackdrop,
inflows has been observed
a sharp in comparator
decline countries.
in FDI inflows hasThe
beenhasrecorded
World explored
Investmentif Report
for a similar
the 2018/19 decline
for 2019 FY. in FDI
The
reveals, inflows
digest
however, has hasinflows
beenifobserved
that explored
FDI a similar
for in comparator
decline
developing in
countries co
FDIhave
inflows
World hasby
increased
been
Investment observed
2.2 %Report
in 2018,for
in2019
while
comparator
reveals,
the increase
countries.
however,
amounted
The for
that
to 10.9%
World
FDI Investment
inflows
Africa for developin
in general and
Report for 2019 reveals, however, that FDI inflows for developing countries have
27.5%
have for Kenya in particular.
increased
increased by 2.2 %byin2.2 2018, % inwhile
2018, the while the increase
increase amounted amounted
to 10.9% to 10.9% for Africa
for Africa in in
general and 27.5% G r ofor
w t hKenya
i n F D Iin
I nparticular.
flows - 2018
27.5% for Kenya in particular.
27.5%

Growth in FDI Inflows - 2018

10.9%

27.5%
3.5%
2.2%
10.9%

Africa Developing East Africa Kenya Ethiopia

3.5%

Countries
-17.6%
2.2%

Africa Developing East Africa Kenya Ethiopia

Source: UNCTAD
Countries
-17.6%

Source:
Source: UNCTAD
UNCTAD

6
ECONOMIC DIGEST-ETHIOPIA
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 Page 9 of 11
የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

Despite
Despite thethe deep
deep in FDI
in FDI inflows
inflows this this
year,year, Ethiopia
Ethiopia has attracted
has attracted the largest
the largest FDI FDI in
inflow in east Africa in 2018. Moreover, the completed industrial parks and the
Africa in 2018. Moreover, the completed industrial parks and the privatization prog
privatization program that the government has initiated recently as part of the
government
homegrown has initiated
economic reform recently as parttoofbe
are reasons theoptimist
homegrownthat economic
FDI inflows reform
will are re
improve provided the challenges are addressed.
optimist that FDI inflows will improve provided the challenges are addressed.

FDI inflows in millions of USD - 2018

Ethiopia
Uganda
Somalia
Madagascar
Seychelles
Comoros
Reunion

0 500 1000 1500 2000 2500 3000 3500

Source:
Source: UNCTAD
UNCTAD

A Homegrown Economic Reform Agenda: A Pathway to Prosperity

A Homegrown Economic Reform Agenda: A Pathway to Prosperity
Rationale for an economic reform agenda
Rationale for an economic reform agenda
• Time§ to Time to leverage
leverage the achievements
the achievements of the
of the past past decade
decade for high-quality
for high-quality growthgrowth
• Need § toNeed
overcome emerging
to overcome challenges
emerging and and
challenges create newnew
create opportunities-
opportunities─ su
sustaining the success of the past decade requires
success of the past decade requires
• Need to upgrade our policy and institutional frameworks to take our success
Need
§ next
to the to upgrade our policy and institutional frameworks to take our success
level
Reform agenda:
level aims to overcome the aforementioned challenges through
comprehensive and well-synchronized set of measures
Reform agenda: aims to overcome the aforementioned challenges through comprehe
1. Macroeconomic reforms:
well-synchronized set of measures
• 1. Macroeconomic
Macroeconomic reforms:
reforms will aim: at correcting imbalances and safeguarding
macro-financial stability
§ Macroeconomic reforms will aim: at correcting imbalances and safeguard
• Macroeconomic measures: correct FX imbalances, control inflation, improve
financial
access to financestability
and ensure debt sustainability
§ Macroeconomic measures: correct FX imbalances, control inflation, improv
7
ECONOMIC DIGEST-ETHIOPIA
PAGE
finance and ensure debt sustainability
 የፕላንና ልማት ኮሚሽን
Planning & Development Commission (PDC)

2. Structural reforms:

• Structural reform will aim: to create an enabling environment for investment

• Structural reform measure: ease business constraints

3. Sectoral reforms:

• Sectoral reform will aim: to address sector-specific institutional and market

failures.

• Sectoral reform measure: Macroeconomic reforms will be complemented with

structural reforms to create an enabling environment for investment along
with sectoral reforms (agriculture, manufacturing, mining, tourism, ICT and
creative industries).

Expected impact of the reform: job creation and sustainable growth

• The rapid growth will be sustained.

• The sources of growth will be rebalanced and diversified, unlocking the full
potential.

• The strong recovery in imports will widen the current account deficit in the
near term.

• Prudent monetary policy will help control inflation.

• Public sector reforms will ensure debt sustainability while continuing to

support growth.

REFERENCES
• Annually and Quarterly Macroeconomic Performance Reports, (2015/16,
2016/17, 2017/18 and 2018/19, 2019/20), Planning and Development
Commission

• National Income Accounting Statistics, 2018/19, Planning and Development

Commission

• A Homegrown Economic Reform Agenda, September 2019, Office of Prime

Minister

• World Investment Report (2019), UNCTAD

• Annual Progressive Report (2019), World Economic Outlook, IMF

8
ECONOMIC DIGEST-ETHIOPIA
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PLANNING AND DEVELOPMENT COMMISSION
(PDC) Commission (PDC)
Planning and Development
Volume 1, Issue 2

Macro Plan Preparation and Consolidation Directorate

Addis Ababa, Ethiopia

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