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FACTBOX-Ethiopian economy hurt by global slowdown
Wed, 8th Jul 2009 13:20
ADDIS ABABA, July 8 (Reuters) - Ethiopia's Prime Minister Meles Zenawi has presided over years of double-digit economic growth for the desperately poor country but has watched the global recession undo some of that progress.
Here are some key facts on the Ethiopian economy:
ECONOMIC OUTLOOK
* The Horn of Africa's roughly $8 billion economy makes it one of the world's poorest nations. With a population of about 80 million, it leaves an average income of just $100 a person.
* Prime Minister Meles Zenawi estimates growth of about 10 percent for this year. But the International Monetary Fund predicts a more pessimistic 6.5 percent.
* Annual average inflation slowed to 14.2 percent in May. Inflation reached a dizzy high of 64.2 percent in July 2008, driven by high food and fuel prices. Meles says it will be down to single figures by September.
* The government says a halt in government borrowing and a rise in bank reserves have underpinned the declining rate. A more controversial measure was a reported instruction from the central bank that private banks hold the line on lending. A report by Access Capital found the average private bank chain serviced just 30 borrowers a month from July-December 2008.
* Ethiopia's economy is overwhelmingly reliant on agriculture -- both for export and to sustain the livelihoods of millions of smallholder farmers.
GLOBAL DOWNTURN SQUEEZES
* Remittances are crucial to Ethiopia, with some estimates putting their hard currency generating capacity equal with coffee exports. Although figures for Ethiopia are unavailable, many African countries have found the cash that used to flow in from their citizens abroad drying up as they lose their jobs.
* A drop in demand and a fall in prices for mostly agricultural exports has hit Ethiopia hard. Coffee -- its traditional cash crop -- is expected to lose as much as 40 percent of its earning power in the 2009/2010 season.
* Ethiopia is the world's seventh largest recipient of foreign aid, receiving more than $1.94 billion in 2006, according to the OECD. As its largest donors look to save money, many fear funds are ripe for cutting -- a move that would have a huge impact as a 10th of the population rely on food aid.
* Rich industrial countries agreed in 2005 to double aid to Africa by 2010, but there are fears among development groups donors could now back away from their promises.
TRADE AND INVESTMENT
* Ethiopia is extremely short of hard currency. Meles said in April foreign reserves stood at just $850 million versus a target of at least $1.2 billion.
The lack of cash has affected the operations of importers, with construction materials in short supply as the crisis worsens.
* Coffee accounted for some 60 percent of Ethiopia's foreign exchange revenue in the 2007/2008 (June/July) season, when it earned more than $525 million from exports of 170,888 tonnes of mostly high quality arabica beans.
* Ethiopian coffee exports will fall by 30-40 percent in 2009/2010 earning about $300 million, the head of the Ethiopian Commodity Exchange told Reuters last month.
* Africa's biggest coffee exporter is also the world's fourth-largest sesame exporter after China, India and Myanmar, exporting 124,291 tonnes of sesame last year. They hope to become the world's biggest exporter this year with a target of 225,000 tonnes bringing in about $250 million.
* Ethiopia's other main exports are pulses and seed oils, leather and flowers. But, once a boom market, the flower industry has been reined in by the global slowdown.
* Africa's second most populous country provides a growing market for investors and Chinese, Indian and Gulf prospectors have been moving in attracted by the large agriculture sector and by potential oil and gas reserves. But foreign direct investment in many parts of Africa is now slowing.
POWER SHORTAGES
* Power rationing started in March and lights now go off every other day on a rotating system in the capital. Cement factories have had to close for a month and exporter factories are now being affected, fuelling the foreign currency shortage.
For Meles interview on G8 summit, click on
For Meles interview on economy, click on
(Reporting by Barry Malone; editing by David Stamp) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/) Keywords: ETHIOPIA ECONOMY/
(Email: nairobi.newsroom@reuters.com; tel: +254 20 222 4717)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Here are some key facts on the Ethiopian economy:
ECONOMIC OUTLOOK
* The Horn of Africa's roughly $8 billion economy makes it one of the world's poorest nations. With a population of about 80 million, it leaves an average income of just $100 a person.
* Prime Minister Meles Zenawi estimates growth of about 10 percent for this year. But the International Monetary Fund predicts a more pessimistic 6.5 percent.
* Annual average inflation slowed to 14.2 percent in May. Inflation reached a dizzy high of 64.2 percent in July 2008, driven by high food and fuel prices. Meles says it will be down to single figures by September.
* The government says a halt in government borrowing and a rise in bank reserves have underpinned the declining rate. A more controversial measure was a reported instruction from the central bank that private banks hold the line on lending. A report by Access Capital found the average private bank chain serviced just 30 borrowers a month from July-December 2008.
* Ethiopia's economy is overwhelmingly reliant on agriculture -- both for export and to sustain the livelihoods of millions of smallholder farmers.
GLOBAL DOWNTURN SQUEEZES
* Remittances are crucial to Ethiopia, with some estimates putting their hard currency generating capacity equal with coffee exports. Although figures for Ethiopia are unavailable, many African countries have found the cash that used to flow in from their citizens abroad drying up as they lose their jobs.
* A drop in demand and a fall in prices for mostly agricultural exports has hit Ethiopia hard. Coffee -- its traditional cash crop -- is expected to lose as much as 40 percent of its earning power in the 2009/2010 season.
* Ethiopia is the world's seventh largest recipient of foreign aid, receiving more than $1.94 billion in 2006, according to the OECD. As its largest donors look to save money, many fear funds are ripe for cutting -- a move that would have a huge impact as a 10th of the population rely on food aid.
* Rich industrial countries agreed in 2005 to double aid to Africa by 2010, but there are fears among development groups donors could now back away from their promises.
TRADE AND INVESTMENT
* Ethiopia is extremely short of hard currency. Meles said in April foreign reserves stood at just $850 million versus a target of at least $1.2 billion.
* Coffee accounted for some 60 percent of Ethiopia's foreign exchange revenue in the 2007/2008 (June/July) season, when it earned more than $525 million from exports of 170,888 tonnes of mostly high quality arabica beans.
* Ethiopian coffee exports will fall by 30-40 percent in 2009/2010 earning about $300 million, the head of the Ethiopian Commodity Exchange told Reuters last month.
* Africa's biggest coffee exporter is also the world's fourth-largest sesame exporter after China, India and Myanmar, exporting 124,291 tonnes of sesame last year. They hope to become the world's biggest exporter this year with a target of 225,000 tonnes bringing in about $250 million.
* Ethiopia's other main exports are pulses and seed oils, leather and flowers. But, once a boom market, the flower industry has been reined in by the global slowdown.
* Africa's second most populous country provides a growing market for investors and Chinese, Indian and Gulf prospectors have been moving in attracted by the large agriculture sector and by potential oil and gas reserves. But foreign direct investment in many parts of Africa is now slowing.
POWER SHORTAGES
* Power rationing started in March and lights now go off every other day on a rotating system in the capital. Cement factories have had to close for a month and exporter factories are now being affected, fuelling the foreign currency shortage.
For Meles interview on G8 summit, click on
For Meles interview on economy, click on
(Reporting by Barry Malone; editing by David Stamp) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/) Keywords: ETHIOPIA ECONOMY/
(Email: nairobi.newsroom@reuters.com; tel: +254 20 222 4717)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
