Ethiopia Macroeconomic Handbook 2011-12
Macroeconomic Handbook 2011/12: Executive Summary
Four growth drivers
Public Investments, an Agricultural Transformation, a Consumer GoodsRevolution, and Emerging Export Industries
will support a rapid pace of economicexpansion in Ethiopia in the coming years.
public infrastructure investments
are set to deliver a wide range of public goods
roads,railways, power plants, schools, and clinics
while simultaneously propping up thousands of private sector companies involved in building and maintaining these brand new public facilities.2.
involving a proliferation of modern commercial farmsas well as a leap in the productivity of smallholder agriculture
is in our view a very realisticpossibility in the next few years, and will hence be a key driver of economy-wide growth.3.
consumer goods revolution
is just beginning
increasingly urban populationand will no doubt gather substantial momentum in the next five years.4.
Emerging export industries
in mining, manufacturing, and exportable services
are alreadymaking their mark as sources of growth in the Ethiopian economy and will soon overtaketraditional foreign exchange earnings from coffee and other agricultural goods.
overwhelming pressures in Ethiopia’s
current economic climate
inflation andchallenging new regulations
are putting strains on private business and could potentially dent the
positive growth prospects:
High inflation has been and remains a major weakness of economic policy, and poses seriousthreats to the business environment by discouraging savings and distorting investment decisions.6.
Abrupt and challenging regulatory changes have also brought additional pressures to businessesin the areas of licensing, registration, taxation, retailing, land acquisition, real estate, and banking.
Fortunately, these recent pressures
can be addressed and contained byactions firmly within the control of domestic economic policymakers. Indeed, taking an economicpolicymaker
s view, we would:
-owned companies, even if just partially, as this not only provides amajor source of GTP financing but also offers a cure for inflation.8.
Modify regulatory policies that inflate business costs and depress urban consumer incomes.9.
Go for bolder and more unconventional agricultural policies, as would be more fitting for adevelopmental state.10.
Put in place a smarter set of policies for the financial sector, the lifeblood and vital
for any fast-growing and modernizing economy