Ethiopia’s macroeconomic achievement; indicator for nation’s remarkable growth

 BY HIZKEL HAILU

According to documents from Office of The Prime Minister, Ethiopia’s economy has registered a decade of rapid and stable growth. Real GDP growth has averaged about 10 percent over the last decade. However, Ethiopia still faces significant development challenges including; creating jobs for the growing youth population; addressing macroeconomic imbalances; improving export performance and fostering private initiatives.

In order to solve these problems, the government of Ethiopia is undertaking different economic reforms. Ethiopia’s economic reform priorities focus on sustaining the current rapid and inclusive pace of growth to create more and better jobs. Specifically, the government’s focus is on ensuring sound macroeconomic management, the document explained.

On top of that, the government has established the Macroeconomic Committee which is the central organ that coordinates economic policy making within the government. Chaired by the Prime Minister, it has nearly 10 members including the Governor of the National Bank of Ethiopia, Ministers from Finance, Planning, Revenue and Senior Economic Advisers. And the committee is working dedicatedly in order to bring remarkable economic growth of the country.

On its recent report and discussion, the Macroeconomic Committee disclosed that Ethiopia has registered a remarkable performance in most of the macroeconomic indicators during the past Ethiopian fiscal year although there were internal and external challenges.

This was noted by the mid of this week during the Macroeconomic Committee meeting to review the major economic performance of the past fiscal year and to set directions for the 2015 Ethiopian fiscal year.

“Our macroeconomic committee meeting today has confirmed the remarkable export performance this past year — better FDI inflow, decrease in inflation in the past two months, optimal green legacy, volunteer activities, remittance, and automation performance,” Abiy said.

“About 20 billion dollars was earned from exports, remittances and direct investment in the fiscal year” He noted. As to him, the export of goods and services reached more than 10.2 billion dollars adding that, these export earnings has reached to 20 billion USD while it includes revenue from remittances and foreign direct investment.

The Prime Minister pointed out that the results achieved in the export trade sector have been fruitful. He said that all of us should be proud of the result as it was a result that came under very difficult circumstances. However, he pointed out that Ethiopia’s export potential can be multiplied and increased more.

He further noted that it is difficult to develop a country without increasing exports. Although there are many indicators of macroeconomic growth, the macroeconomic committee shall mainly evaluate what it has brought in

exports through understanding that exports are significant for the growth of other sectors.

During the meeting, the Premier further said that the government will continue its efforts to register better economic performances in all sectors in the ongoing budget year. He added that the mining and energy sectors need a special attention.

As to him, a number of tasks have to be done to reduce the debt stress. In this regard, the promising start-ups should be strengthened.

“If we do the aforementioned tasks properly, next year’s results could be better than last year’s results. And it is also key we build and expand on this year’s achievements,” Abiy further indicated.

The Premier promised that the government will try its best to solve challenges in all sectors regarding finance, infrastructure, and bureaucracy.

Presenting the performance report, Planning and Development Minister, Fitsum Assefa (PhD) for her part stated that the performance during the past Ethiopian fiscal year is better in many aspects, mainly in the export sector.

The Minister further stated that the nation secured over 4.1 billion USD form the export of goods. The country also generated over 6.3 billion USD from the service sector. Besides, last year’s overall better performance helped the economy to create at least 2.3 million new jobs.

She added that the foreign exchange that has been gained in the exportation of goods is the highest in Ethiopia’s history of export trade, and the export sector has contributed meaningfully to the growth of the country’s macro economy.

Ethiopia has gained over 5 billion USD in remittance during the past fiscal year, she said adding, that the achievement is remarkable.

As to her, data shows that Ethiopia is the first destination of foreign direct investment in East Africa. And, over 2.3 million citizens have secured jobs in the specified fiscal year. However, the Minister stated that inflation has continued to be a major challenge for the macroeconomy.

Authorities say inflation has been decelerating since June, during which it dropped to 34 percent from 37.2 percent in May. Still, consumer-price growth remains high with the existence of COVID-19 pandemic and Russia-Ukraine conflict-related challenges adding risks to price hikes in fuel, edible oil, and fertilizer supply line.

According to the Ministry of Planning and Development, Ethiopia’s inflation problem has been building up for a long period of time mainly due to low productivity and lack of competitiveness in the market.

The increasing investments in agriculture and the agro-processing sector, which are showing positive outcomes, could help tackle the challenge. The government will continue to exert its efforts not only in addressing the inflation problem but also to register better economic performances in all sectors in the new fiscal year, according to Fitsum.

Members of the National Macro Economy Committee so far underscored that the achievements registered in many spheres of the economic sector have hugely contributed to the improvement of Ethiopia’s overall macroeconomic performance. The committee reviewed the major economic performance of the year and set directions for the upcoming budget year in the presence of the Premier.

Cognizant of this fact, the committee reviewed that Ethiopia has registered better performance in most of the macroeconomic indicators during the fiscal year. The performance of export trade has taken the lion’s share for the remarkable result of macro-economy, it was learned.

In addition to the success in export sector, the macroeconomic committee also reported that the citizen-oriented development activities have also performed better. According to Finance State Minister and member of the National Macro Economy Committee, Eyob Tekalign, priority was given to all macro-economic sectors during the year.

He further explained that a lot of work has been done to diversify export products in quantity and quality as well as to avoid dependency on only certain products.

As a result, better income was obtained from coffee, mining and other sectors, the state minister said, adding that the income from minerals has, for instance, grown by 64 percent on average. These results have played a significant role in enabling Ethiopia to cope with the domestic and foreign pressures by registering better macroeconomic performance, Eyob explained.

Ethiopian Investment Holdings CEO and member of the National Macro Economy Committee, Mamo Mehretu on his part said that the export sector secured additional 1.2 billion USD when compared with the previous fiscal year.

Despite the prohibition of duty-free opportunity (AGOA) to Ethiopian goods, the CEO indicated that the export performance of the manufacturing sector has been able to grow by 26 percent, he noted.

Approached by Ethiopian Press Agency (EPA), Export Trade CEO of Ministry Trade and Regional Integration Gemechis Melaku stated that the report was very remarkable that can surly stabilize the nation’s economy. As to him, Ethiopia has been able to increase its exports through expanding the export market destinations and other market effects.

“The general export trade in this fiscal year is different from the others in that it has earned billions of revenue. This is the greatest victory in the history of the country. This result was achieved through extensive discussions with the business community and the manufacturer. Legal action has also been taken against those who were missing the law,” he elaborated.

According to him, the highest export earning was recorded in coffee sector. While share of the agricultural sector was 105 percent, shares for the industrial and the mining sectors were 85 and 53 percent respectively.

All in all, Ethiopia has registered notable accomplishments in macroeconomic sectors. The secret of the success is rooted in the nation’s focus on the indigenous economic structure. As the country has continued registering outstanding achievements in the midst of adversity conditions, it will surely realize the intended prosperity.

The   7August 2022

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