Economy of Ethiopia

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Economy of Ethiopia
Currency	Birr (ETB)
Fiscal year	8 July - 7 July
Trade organisations	AU, WTO(observer)
Statistics [1]
GDP ranking	73rd (2005) [2]
GDP	$64.73 billion (2005)
GDP growth	8.9% (2005)
GDP per capita	$900 (2005)
GDP by sector	agriculture (47.5%), industry (9.9%), services (42.6%) (2005)
Inflation	11.6% (2005)
Pop below poverty line	50% (2004)
Labour force	27.27 million
Labour force by occupation	agriculture and animal husbandry (80%), industry and construction (8%), government and services (12%) (1985)
Unemployment	N/A (2002)
Main industries	food processing, beverages, textiles, chemicals, metals processing,cement
Trading Partners [3]
Exports	$612 million (2005)
Export - Commodities	coffee, qat, gold, leather products, live animals, oilseeds
Main partners	Saudi Arabia 6.9%, Djibouti 6.8%, Switzerland 6.4%, Italy 5.9%, U.S. 5.5%, Netherlands 4.2% (2005)
Imports	$2.722 billion (2005)
Imports - Commodities	food and live animals, petroleum and petroleum products, chemicals, machinery, motor vehicles, cereals, textiles
Main Partners	Saudi Arabia 14.7%, China 12.6%, US 12.4%, India 6.7%, Italy 4.6% (2005)
Public finances [4]
Public debt	106.2% of GDP
Revenues	$2.338 billion (2005)
Expenses	$2.88 billion, capital expenditures of $788 million (2005)
Economic aid	$308 million (recipient)(2001)

The economy of Ethiopia is based on agriculture, which accounts for half of gross domestic product (GDP), 60% of exports, and 80% of total employment.

The major agricultural export crop is coffee, providing about 65% of Ethiopia's foreign exchange earnings. Coffee is critical to the Ethiopian economy, and Ethiopia earned $259 million in 1999 by exporting 105,000 metric tons; this was down from $275 million in the previous year, due to drought in the Sidamo region. More than 15 million people (25% of the population) derive their livelihood from the coffee sector.^[1] According to current estimates, coffee contributes 10% of Ethiopia's GDP.

Other exports include live animals, hides, gold, pulses, oilseeds, and khat (or qat), a leafy shrub which has psychotropic qualities when chewed.

Ethiopia's agriculture is plagued by periodic drought, soil degradation caused by overgrazing, deforestation, high population density^{[citation needed]}, high levels of taxation and poor infrastructure (making it difficult and expensive to get goods to market). Yet agriculture is the country's most promising resource. A potential exists for self-sufficiency in grains and for export development in livestock, grains, vegetables, and fruits. As many as 4.6 million people need food assistance annually.

Gold, marble, limestone, and small amounts of tantalum are mined in Ethiopia. Other resources with potential for commercial development include large potash deposits, natural gas, iron ore, and possibly petroleum and geothermal energy. Although Ethiopia has good hydroelectric resources, which power most of its manufacturing sector, it is totally dependent on imports for its oil. Prior to the outbreak of the 1998–2000 Ethiopian–Eritrean war, landlocked Ethiopia mainly relied on the seaports of Asseb and Massawa in Eritrea for international trade. Ethiopia currently uses the ports of Djibouti, connected to Addis Ababa by rail, and to a lesser extent, Port Sudan in Sudan. In May 2005, the Ethiopian government began negotiations to use the port of Berbera in Somaliland. Of the 23,812 kilometres of Ethiopia's all-weather roads, 15% are asphalt. Mountainous terrain and the lack of good roads and sufficient vehicles make land transportation difficult. However, the government-owned airline is excellent. Ethiopian Airlines serves 38 domestic airfields and has 42 international destinations.

Dependent on a few vulnerable crops for its foreign exchange earnings and reliant on imported oil, Ethiopia lacks sufficient foreign exchange. The financially conservative government has taken measures to solve this problem, including stringent import controls and sharply reduced subsidies on retail gasoline prices. Nevertheless, the largely subsistence economy is incapable of supporting high military expenditures, drought relief, an ambitious development plan, and indispensable imports such as oil and, therefore, must depend on foreign assistance.

In December 1999, Ethiopia signed a $1.4 billion (1.4 G$) joint venture deal to develop a huge natural gas field in the Somali Region. The war with Eritrea has forced the government to spend scarce resources on the military and forced the government to scale back ambitious development plans. Foreign investment has declined significantly. Government taxes imposed in late 1999 to raise money for the war will depress an already weak economy. The war has forced the government to improve roads and other parts of the previously neglected infrastructure, but only certain regions of the nation have benefited.

Map of economic activies in Ethiopia and Eritrea (1976)

The current government has embarked on a program of economic reform, including privatization of state enterprises and rationalization of government regulation. While the process is still ongoing, the reforms have begun to attract much-needed foreign investment.

1 Macro-economic trend
2 See also
3 External links
4 References

[edit] Macro-economic trend

The following table displays the trend of Ethiopia's gross domestic product at market prices. It is estimated by the International Monetary Fund with figures in millions of Ethiopian Birr.