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Sitting on top of the world

Sitting on top of the world

Bereket Gebru 07-17-17

The growth of the Ethiopian economy has received numerous complements at the regional and the international stage over the last decade. We have seen Ethiopia being tipped as one of the sixteen countries set to replace China as the world’s manufacturing hub. There was a time when its double digit growth puts it as the third fastest growing economy next to China and India.

However, the latest complement puts it at the peak of international economic growth. The World Bank’s 2017 Global Economic Prospects has identified Ethiopia as the fastest growing economy, not only in Africa but the world in general. Ethiopia’s 8.7% growth in 2016 proved to be unmatched anywhere in the world as Ethiopia finally assumes the leading role in economic growth in the world.  

The past couple of years have been quite hard for Ethiopia as natural and man-made problems posed themselves as notable challenges of political and economic development. It has barely been a year since the country shrugged off the worst drought in half a century. The El Nino induced drought was then almost immediately replaced by a La Nina induced flooding. There is also an ongoing drought in some parts of the country.

These natural calamities were, sadly, complemented by violent unrests in their destructive endeavors. The unrests that claimed the lives of hundreds of Ethiopians took their toll on political stability, investments in the country, momentum of economic growth and morale. The unity and determination required as a society to achieve sustainable development has taken a considerable blow as a result of the unrest.

With all these negatives weighing against it, it is no wonder that the Ethiopian economy slowed down. However, there have been positive signals along the way. One of these signals is that the economy managed to handle a severe drought and stopped it from turning into a famine. Its retention and drawing capacity of foreign investment after the fatal unrests is another indicator of an economy on a solid basis. 

Recent reports by the IMF and the WB, however, give these positives a huge twist. The IMF recently reported that Ethiopia’s economy has officially overtaken Kenya as East Africa’s economic giant. A report by africanews.com states:

According to International Monetary Fund (IMF) figures, Ethiopia’s annual economic output (i.e. Gross Domestic Product (GDP)) for this year was expected to hit $78 billion from $72 billion recorded last year. Their economic growth since 2015 has been pegged at 10.8% which has helped put a significant gap between them and Kenya. In monetary terms, Ethiopia has opened a gap of about $29 million over Kenya.

 

Even during its tough days, the Ethiopian economy is growing enough to overtake economies widely thought to be three decades ahead of it just fifteen years ago. With the Kenyan economy performing well, it has taken the double digit growth of the Ethiopian economy half of that projected time to overtake it. The milestone is definitely an indication of the huge feat of the Ethiopian people to drag themselves out of poverty.

 

This week the World Bank reported that Ethiopia’s economy will be the most expansive in the African continent in the year 2017. The Global Economic Prospect Report indicates: ‘‘Ethiopia is forecast to expand by 8.3 percent in 2017, Tanzania by 7.2 percent, Ivory Coast by 6.8 percent, and Senegal by 6.7 percent, all helped by public investment.

 

With the most severe drought and the unrest subsiding, Ethiopia has taken considerable leaps in pushing its economic growth further than last year’s 7.5 percent. Ethiopia has wasted no time to picking up where it left off before the unfortunate natural and man-made problems it faced.

 

Both the IMF and the WB reports single out public investment in infrastructure as the main driving force behind the stellar rise of the Ethiopian economy. That spells a lot of commendable social changes to the Ethiopian people. Enjoying one of the least Gini coefficients in fast growing economies, the Ethiopian economic growth is characterized by a balanced distribution of wealth among its people.

 

The country has notably recorded a double digit growth in the last fifteen years, propelling it to stand among the fastest growing economies in the world. The development that ensued has liberated half of the population of the chronic poverty that shackled its limbs. The social realities in the countries have, therefore, changed for the better within the specified time. The political and diplomatic realities of the country have also benefitted greatly from the rapidly improving economic and social conditions.

Just a closer look at the humongous changes in the agricultural sector would clarify the level of progress the country has seen recently. For instance, the total agricultural harvest in the country stood at 73 million quintals annually in the mid 1990s. However, the autumn harvest alone this year has reached 280 million quintals. During the fifteen years of the EPRDF’s renaissance, the harvest of subsistence farmers increased fourfold. The national food supply has grown to reach three quintals per person annually.

Considering there was no lack of impediments to the growth of the Ethiopian economy in the past couple of years, its colorful emergence at the other end is a testimony of its steel. Achieving growth rates of 7.5 and 8 percent right after powerful natural and man-made disasters is a commendable feat by any standard.

The Ethiopian economy has enjoyed double digit growth over the years and the country has become one of the fastest growing economies in the world. The country’s image has changed for the better over the years with the lingering association with famine slowly being replaced by that of social development.

For all the doubters who felt like Ethiopia’s economic growth would not withstand the test of drought and political unrest, the last couple of years was a demonstration that the development is deep rooted. Far from their expectations that a single challenge would blow away the success, the Ethiopian economy faced a number of epic challenges at a time and came out the other end unscathed.

The recent reports by the two major international financial institutions prove that the Ethiopian economy is fulfilling its potential. With national plans to take the country to middle income status by 2025, the impressive growth levels registered in the immediate aftermath of a rough patch indicate that the country is on the right track.    


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