Ethiopia's Economic Outlook in the First 6 Months of 2024

African region is picking up third year in a row, with strong economic growth, new FDI's invested on multiple sectors including tourism, and GDP getting stronger.

Lets look into some numbers and predictions for economic growth in Ethiopia:

GDP Growth and Projections:

Ethiopia's real GDP growth fell to 5.3% in 2022 from 5.6% in 2021 but remained above East Africa's average. However, it is projected to grow to 6.2% in 2024, driven by industry, private consumption, and investment.

Macroeconomic and Financial Developments:

- Income per capita grew by 2.7% in 2022, but internal conflict and drought increased humanitarian support requirements from 15.8 million people in 2021 to 20 million in 2022.

- Ethiopia's application for the G20 Common Framework for debt restructuring in 2021 led to a downgrade in its sovereign rating from B to CCC by Fitch and S&P.

- Despite challenges, Ethiopia maintains a robust economic outlook with a projected growth rate of 6.2% for 2024, surpassing the anticipated global growth rate of 2.9% and the expected growth rate for the African continent at 4% for 2024.

Challenges and Reforms:

- Ethiopia's macroeconomic and socioeconomic situation remains challenging, with pressure across all macroeconomic indicators. Inflation remains high, reserves are low, and fiscal and current account deficits persist.

- The fiscal deficit/GDP ratio has reduced to 2.9% against 3.6% in the preceding fiscal year. The current account deficit was USD 5.7 billion or 3.5% of GDP in 2023 compared to 4.2% of GDP in 2022.

Business Deals and New Setups:

- Ethiopian Airlines signed a strategic partnership agreement to jointly commence sea-air multimodal transportation with International Djibouti Industrial Park.

- A new gold mining company commenced operations in the Gambella region in Western Ethiopia.

- The private sector is expected to be a key contributor to Ethiopia's future development, with prominent roles being played by the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) towards supporting private domestic firms and foreign investors.

Tax Revenue and Trade:

- The Ethiopian Ministry of Revenue collected over 130.7 billion birr ($4.6 billion) during the first eight months of the fiscal year.

- The Ministry also announced arresting 105 traders suspected of tax fraud amounting to 14 billion birr.

- Total exports were worth USD 4 billion in 2022, while total imports were USD 19 billion.

Despite challenges, Ethiopia's economic outlook for 2024 appears promising, fueled by resilience, growth drivers, and a commitment to financial stability and reforms. The country is projected to be the second-fastest-growing economy in Africa with a GDP growth forecast of 6.2%.

In summary, Ethiopia's economic landscape in the first 6 months of 2024 reflects a mix of challenges, growth projections, and ongoing developments in various sectors, including industry, private consumption, investment, and the private sector's role in the country's development.

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Tewabech (Teba) H. Molla MSc.

Banking, Management Consulting, and Information Advisor