World Bank Group Praises Ethiopia on its 5th Ethiopia Economic Update
World Bank Group
Tigrai Online, Ethiopian News, Dec. 7, 2016
The following is a basic introduction to the 79 page complete report which we provided a link for you to take a look. Those who are dreaming, planing, colabrating, and working hard to stop the Ethiopian miraculous Ethiopian economic growth are strongly adviesed to quit befor their efforts turn to thier demise. Ethiopia and Ethiopians are unstopable no matter what! TOL Admin.
Strong economic growth continued in 2014/15, but the drought slowed down Ethiopia’s growth to 8 percent in 2015/16. The Ethiopian economy grew by 8.0 in 2015/16 due to the recent drought affecting agricultural production with spillovers on the trade sector. Construction and services sectors account for most of the growth from the supply side. On the demand side, growth is driven by investment followed by private consumption. Economic growth over the past years was accompanied by a reduction of unemployment, although it remained high. Urban unemployment in the formal sector declined over the last decade, albeit slowly, and was reduced from 23 percent in 2004 to 17 percent in 2015. The urban economy is dominated by the manufacturing, construction, and services sectors with some unskilled labor migration from rural areas. Chapter 2 of this report will analyze these issues in more detail.
After double digit growth in 2014/15, Ethiopia’s economic growth slowed down in 2015/161 due to the recent drought. Real GDP grew by 8 percent in 2015/16 compared to 10.4 percent growth in 2014/15. Still, Ethiopia’s economy was among the fastest growing in the world showing how well the economy passed through adverse shocks. The growth nevertheless falls short of the Government’s own target set out in the Growth and Transformation Plan II (GTP II), which projected at 11.4 percent. Overall, the five year GTP I period (2010/11 to 2014/15) achieved a very high growth rate of 10.1 percent per year, on average. When considering the last dozen years since 2004, real GDP growth averaged 10.5 percent. This translated into an average per capita (in dollar terms) growth of 7.9 percent, which is equivalent to the annual per capita growth rate needed for Ethiopia to reach middle-income status by 2025.
Ethiopia is not a stranger to droughts and their impact is often large due to the importance of the agriculture sector in the economy and in peoples’ lives. The country has seen more than 15 drought episodes between 1964 and 2015. They varied in impact, and some of them led to full-fledged humanitarian crisis, for instance in the 1980s, and in a large drought in 2002/03. The large impact of droughts is explained by the fact that the agriculture sector is, by far, the biggest employer in Ethiopia, accounts for most merchandise exports, and is the second largest in terms of output. In addition, agricultural growth was an important driver of poverty reduction in Ethiopia over the past decade (2004 to 2014): Each percent of agricultural growth reduced poverty by 0.9 percent compared to 0.55 percent for each percent of overall GDP growth 57. Agriculture is also the major sector contributing to growth in Ethiopia. The share of agriculture was 38 percent in FY 2015, which contributed about 2.6 percentage points to the 10.2 percent GDP growth in 2014/15. Crop production accounts for about three-quarters of agriculture value-added;25 this is followed by livestock which accounts for one-fifth of the agricultural value added. Agriculture is still largely rain-fed and dominated by small holders.