Ethiopian economy: Growing, but still impoverished.

One of the poorest countries in the world, Ethiopia is not much affected by the global recession, and projected to record economic growth of 10% this fiscal. Even though commodity prices have come down in the international market, it still had a minimal impact on the Ethiopian economy.

Ethiopia is an agricultural economy, with coffee being its major cash crop, and foreign exchange earner. Apart from coffee, the country produces cereals, oilseeds, cotton, sugarcane, pulses, etc. Livestock breeding is also an important activity.

The country exports coffee, gold, leather, tea, sugar, etc. And imports chemicals, machinery, industrial capital goods, foodstuffs, etc. Among the major industries are food processing, textiles, metals processing, cement, etc.

The impact of the global recession on Ethiopia, though not very high, has nevertheless, affected its revenues mainly on account of lower commodity prices, apart from impacting on foreign inward remittances. On the other hand, the country has also incurred lesser expenditure for the import of oil and other capital goods.

The major problem faced by the country is its dependence on agriculture for over 60% of its export earnings, and 80% employment. And agriculture is not highly mechanized and efficient. Dependence on rainfall makes it difficult to plan ahead and make projections. Inflation is another problem that puts a lot of pressure on the economy though it has eased to a good extent from 40% in 2008 to around 15% in 2009.

A high birth rate and high unemployment have been a fixture of the national like in Ethiopia for long. Lack of foreign exchange has hampered the growth of the country and it has had to depend on foreign aid time and again to keep its economy oiled. On one occasion, it has also been a beneficiary of a write down of foreign loans extended by the IMF.

The Ethiopian economy presents a contradictory picture of growth without percolation of prosperity down the line, among the people.