Ethiopia’s strategic location as a launching pad in the Horn of Africa, near to the Middle East and its markets, provides it strategic superiority. Ethiopia is a landlocked country that shares borders with Eritrea, Somalia, Kenya, South Sudan, and Sudan, and has relied on Djibouti’s main port for international trade for the past two decades. With the recent Eritrean peace accord, Ethiopia is expected to regain access to the Eritrean ports of Assab and Massawa as well.
Ethiopia is Africa’s second most populous country after Nigeria, with 115 million inhabitants (2020), and the region’s fastest-growing economy, with 6.1 percent growth in FY2019/20. It is, nevertheless, one of the poorest, with a gross national income per capita of $890. By 2025, Ethiopia wants to be classified as a lower-middle-income country.
Ethiopia has been one of the world’s fastest growing countries over the past 15 years (at an average of 10 percent per year). Capital accumulation, particularly through public infrastructure projects, was a major driver of growth, among other things. Due to COVID-19, Ethiopia’s real GDP growth slowed in FY2019/20 and even more in FY20220/21, with growth in industry and services falling to single digits. Agriculture, which employs more than 70% of the population, was unaffected by the COVID-19 epidemic, and its contribution to growth improved marginally in FY2019/20 compared to the previous year.
Between 2010 and 2020, persistent strong economic growth led in positive trends in poverty reduction in both urban and rural areas. The percentage of the people living in poverty has reduced from 30% in 2011 to 24% in 2016, and human development indicators have improved over time. Despite this, many flaws remain. Inequality is on the rise, owing to the growing discrepancy between urban and rural areas. The bottom 10% of the population has not grown in terms of consumption (as of 2005), notably in rural areas, and inequality is on the rise. Furthermore, COVID-19 has exacerbated existing flaws.
The government has unveiled a new 10-year development plan that will run from 2020/21 through 2029/30 and is based on the 2019 Home-Grown Economic Reform Agenda. The plan intends to maintain the phenomenal growth achieved during the preceding decade’s Growth and Transformation Plans while easing the transition to a more private-sector-driven economy.
Ethiopia’s key problems include maintaining positive economic growth and accelerating poverty reduction, both of which necessitate significant progress in job creation and stronger governance to guarantee that growth is equitable across the country. The government spends a large portion of its budget on anti-poverty initiatives and investments. Large-scale donor financing will continue to play an important role in funding pro-poor activities in the near future. The following are some of the most significant challenges:
- Ethiopia, like the rest of the world, has been hit hard by the COVID-19 pandemic’s catastrophic social and economic consequences. While exports and foreign direct investment have recovered in 2020/21, and jobs have recovered, there are likely to be some long-term scars. Urban employment has not entirely recovered, some people and businesses continue to report income losses, and poverty levels are projected to have risen.
- The battle, which began in November 2020, is expected to have an impact on agriculture productivity and food security in the country’s north, as well as stymie economic recovery.
- Ethiopia’s Human Development Index is 0.38, implying that a kid born today in Ethiopia will be 38 percent as productive as if he or she had access to a complete education and good health. This is lower than the Sub-Saharan Africa average, but slightly higher than the low-income country average. Learning poverty affects 90% of children under the age of five, and 37% of children under the age of five are stunted.
- Ethiopia has been dealing with the largest locust invasion in decades since 2020. This might jeopardize Ethiopia’s development progress and jeopardize millions of Ethiopians’ food security and livelihoods.
- A nascent private sector whose ability to grow and create jobs has been hampered by business climate and competitiveness concerns.
- The growing workforce (roughly 2 million per year) puts strain on the labor market’s absorption capacity, necessitating job improvement while also providing enough new jobs.
What will Ethiopia’s GDP be in 2021?
According to Trading Economics global macro models and analysts, Ethiopia’s GDP is predicted to reach 110.00 USD billion by the end of 2021. According to our econometric models, Ethiopia’s GDP will trend around 112.00 USD billion in 2022 and 115.00 USD billion in 2023 in the long run.
What is Ethiopia’s GDP forecast for 2019 and 2020?
Ethiopia’s GDP increased by 6.1 percent in 2020 compared to the previous year. This result is 29 tenths of a percent lower than the 9 percent figure given in 2019. Ethiopia ranks 65th out of 196 nations in terms of GDP in 2020, with a total of $96,611 million dollars.
Is Ethiopia Africa’s richest country?
- Nigeria: You’ve probably heard speeches or read stories in which Nigeria was referred to as Africa’s largest economy. That’s primarily due to the magnitude of its GDP. Nigeria has Africa’s biggest GDP, estimated to be $514.05 billion in 2021.
- Egypt: This North African country boasts Africa’s second-largest GDP. It has the biggest GDP in North Africa, $394.28 billion, and is one of just three countries from the region in the top 10.
- South Africa: With a GDP of $329.53 billion, this country in Southern Africa is third on the list. South Africa is one of just two Southern African countries to be included on the list.
- Algeria is the second Northern African country to appear on this list. Algeria has the fourth largest GDP in Africa, according to Statista, with $151.56 billion.
- Kenya has a GDP of $106.04 billion and is located in East Africa. It is the only country from Eastern Africa that has made the top 10 list.
- Ethiopia is the only country from the Horn of Africa to appear on this list. According to Statista, the country’s GDP is $93.97 billion dollars.
- Ghana is the second-largest economy in West Africa, with a GDP of $74.26 billion dollars.
- Ivory Coast: With a GDP of $70.99 billion, this francophone West African country ranks eighth in Africa.
Why is Ethiopia the world’s poorest country?
Ethiopia, an African country, has made significant progress in reducing poverty since 2000, when it was estimated that their poverty rate was among the highest among all countries. The government has made significant progress toward achieving the Millennium Development Goals, such as eradicating major diseases and lowering child mortality rates. Despite these gains, the country’s poverty rate remains exceedingly high. The growth of the agriculture sector was one of the most important elements in reducing poverty. Poor farmers have been able to raise food prices in order to increase sales and revenue, but this expansion has come at the expense of the country’s poorest residents, who could not afford the increased rates. Changing Ethiopia’s economy from an agricultural-based economy to a more industry-based one is one of the most difficult tasks to overcome. Ethiopia’s current poverty-reduction plan aims to expand on the country’s existing government systems and development programs.
In Ethiopia, which region is the most prosperous?
The Amhara Highlands, according to Ethiopia’s government website, get 80% of the country’s total annual rainfall and are the country’s most fertile and climatically favorable region. The Blue Nile originates at Bahir Dar, in the Amhara Region’s Lake Tana. When the Blue Nile’s flow reaches its peak (during the rainy season from June to September), it supplies roughly two-thirds of the Nile’s water. Until the Aswan High Dam was completed in Egypt in 1970, the Blue Nile, along with the Atbara River to its north (which also flows out of the Ethiopian Highlands), caused annual Nile floods that contributed to the Nile Valley’s fertility, allowing the rise of ancient Egyptian civilization and, in turn, the development of Egyptian mythology.
Is Ethiopia a Third-World country?
Ethiopia is classified as a third-world country because of its high poverty rate. With a strange land structure and a population of 16 million people, this country is ranked 16th in the globe.
Is Addis Ababa impoverished?
Among the regional states, there is more variety. Compared to around half of the population in most other regions and about four out of ten inhabitants in Addis Ababa, more than six out of ten residents in the SNNP (66%) and Somali (61%) regions experienced moderate or high levels of lived poverty (42 percent ).
Why is Ethiopian development lacking?
Ethiopia has a 44 percent poverty rate, and many Ethiopians live in dangerous conditions. Some of the dwellings in the country are made of cardboard. Others are composed of rope, sticks, mud, and other materials, causing occupants to have terrible hygiene. Many homes are built without windows, which can trap dangerous pollutants within. Why is Ethiopia so poor, you might wonder?
Ethiopian farms are suffering from a shortage of rainwater due to droughts and other natural disasters. Famines occur, and crops suffer tremendously as a result. Food and fertilizer prices in Ethiopia are also rising, leaving many Ethiopians unable to afford these necessities. This is especially troublesome given the fact that agriculture provides economic stability to 80% of Ethiopians.
Ethiopia’s poverty is exacerbated by a lack of infrastructure and basic amenities such as safe drinking water, education, and healthcare. Malaria, HIV, and other ailments kill many Ethiopians who work to support their families. More Ethiopian families could be able to climb above poverty if more Ethiopians have access to healthcare and other essential services.
Women-headed Ethiopian families are more vulnerable to poverty. Many Ethiopian mothers do not participate in awareness campaigns, and as a result, many of their infants are malnourished, lack literacy skills, and die. If more Ethiopian women and other underprivileged groups in the country participated in awareness programs, this problem could be avoided.
Why is Ethiopia so impoverished? Human rights violations have harmed Ethiopia’s poor, even if some were committed with the intention of strengthening the country’s economy. According to Obang Metho, executive director of the Solidarity Movement for a New Ethiopia, “progress is not as durable when a society is not free.”
There is reason to believe that Ethiopia’s economy would improve. Ethiopia has had a ten percent economic growth rate for more than a decade, putting the country on track to reach the United Nations’ development goals. Ethiopia’s government hopes to achieve a middle-income status by 2025.
In 2000, Ethiopia’s poverty rate was 44%, but by 2011 it had reduced to 30%. One of the primary causes of this shift was the expansion of agriculture. If such a transformation occurred again, it might be beneficial to Ethiopians now. Since 2000, education, household health, and living standards have all improved steadily.
Why is Ethiopia so impoverished? To grow its economy, Ethiopia should retain a focus on agricultural development. Promoting farm expansion and assisting households in overcoming migratory barriers could also help Ethiopians achieve financial stability. While safety net initiatives have proven to be beneficial, they must continue to adapt to Ethiopia’s fluctuating poverty levels.