ADDIS ABABA – Ethiopia’s Gross Domestic Product (GDP) will expand by 6.6% this year despite various challenges facing the economy, authorities said on Tuesday.
The latest projection was made two weeks after the International Monetary Fund (IMF) said the economic growth would slow down this year.
The IMF, in its outlook, forecasted the economy to expand by 3.8% in 2022, down from 6.3% the 2021, attributing the slowdown to military conflict in the first half of the fiscal year, the lingering effects of the Covid-19 pandemic as well as the spillovers from the war in Ukraine.
On Tuesday morning, the National Macro Economic Council reviewed today the nine-month performance of Ethiopia’s macro economy in the presence of Prime Minister Abiy Ahmed.
In a statement, the Council said the review confirmed that the impacts emanating from both internal and global challenges have “incurred huge cost” on the economy.
Apart from the displacing many and destroying of properties, it said the war in northern Ethiopia has also disrupted the business activities, causing major impacts on the economy.
The unfortunate war in Ukraine is not helping either. Ethiopia is dependent on wheat imports from the warring parties Russia and Ukraine, adding pressure on food prices.
The prices of wheat and edible oil have increased by 65% in the months of February and April alone, exacerbating the inflation in the country, said Fitsum Asefa, plan and development Minister.
The rise in the global fuel prices also forced the authorities to increase fuel subsidy by 85%, which led to fuel retail price adjustment last week.
From now to the end of the fiscal year, the government needs up to $1.9 billion to respond to the challenges, the minister said.
– GDP to Grow’ –
Despite these challenges, the commission Ethiopia’s Gross domestic product (GDP) to show 6.6% growth this year.
“Based on the Economic growth registered in the first two quarters of the FY, the GDP is expected to grow by 6.6%, showing a slight increase from the previous year,” reads the statement.
The growth would mainly be driven by encouraging results in the agriculture sector, particularly in crop production, the council explained.
Apart from the main Meher harvesting season, 25 million quintals of wheat is expected to be harvested through the summer irrigation development program.
At least 613 hectares of land have been cultivated through the summer irrigation program. This would increase the crop production to 336 million quintal of produce this year.
The easing impacts of the pandemic is also reviving the service sector growth while export trade continues to perform better. Ethiopia has secured over $2.9 billion from export during the nine-month period, while the service sector generated $4.5 billion.
– Inflation a Concern –
The council said the continued rise in the cost of living is still the main challenge for the economy.
The latest Central Statistical Agency report shows that the inflation rate in the country rose to a record high of 36.6% in April, up from 34.7% in March.
“Various steps taken to reduce the rate to a single digit in the last three years,” it said. “they, however, could not bring about the desired outcome due to several global and local factors.”
The government will continue to take additional measures, including policy adjustments, to contain the inflation pressure, the Council said.
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