Ethiopia’s GDP Surged to a Record ETB1.8 trillion in Past Fiscal Year

The real Gross Domestic Product (GDP) of Ethiopia, a parameter employed to measure the size of an economy, has reached ETB1.8 trillion (USD60 billion), National Bank of Ethiopia (NBE) reveals. The Bank, in its latest report published last week, disclosed that Ethiopia’s economy has recorded a nine percent growth in 2018/19, faster than the 7.7Pct expansion in the previous financial year. An improvement in industrial output, coupled with the growth of the service sector, has largely contributed for the growth registered in the past fiscal year.

“The past fiscal year’s economic growth was attributed to 12.6Pct growth in industrial output, 11Pct increase in service sector and 3.3Pct expansion in agriculture,” said Yinager Dessie, in his note published in NBE’s latest annual report. This has resulted in the rise in share of the industry and service sector, while the contribution of the agriculture sector has declined.

Particularly, the share of industry sector in GDP has increased by one percentage points to 28.1Pct during the past financial year, while that of service sector rose slightly by 0.6 percentage points to 39.8Pct. In contrast, the share of agriculture to GDP dropped by almost two percentage points to 33.3Pct during the same period.

“This gradual but steady shift in the structure of the economy reflects the government’s policy direction of developing manufacturing sector and promoting export-led growth, while continuing to give due attention to modernizing the agriculture sector, which has dominated the country’s economic base for years,” Yinager said.

The growth in industry sector is largely the result of the expansion of the construction sub-sector. According to the report of the Central Bank, Manufacturing sector grew by 7.7Pct and constituted 24.3Pct of the industrial output. Construction industry, on the other hand, showed a 15Pct expansion and contributed 72.5Pct to the industrial output, signifying the leading role of the sector in roads, railways, dams and residential houses construction, according to NBE.

Next Year, Central Bank predicted that Ethiopia’s economy would grow by 10.2Pct during the current financial year. However, World Bank, in its latest forecast, projected that the East African country would witness a 6.2Pct economic growth. “Growth is expected to slow due to tighter fiscal and monetary policy stances aimed at containing inflation,” the World Bank said in its report released On January 8, 2020, in Washington. General inflation has reached 19.5Pct last month in Ethiopia, according to the Central Statistical Agency.