Business
Rapidly expanding growth in Ethiopia dips to 7%
(Reuters) – Ethiopia’s economy is likely to grow 7 percent a year over the next three to five years, below its average of the last decade, and to push that rate higher, the government needs to change policy to encourage more private investment, the World Bank said.
While 7 percent gross domestic product (GDP) growth would be the envy of finance ministers in Western economies, it would fall short of an average rate of 10.6 percent that Ethiopia said it achieved in the last 10 years with its state-interventionist policies.
It would also be insufficient to meet Ethiopia’s target of reaching middle-income status by 2025.
That goal is still within reach, however, if the government shifts the balance from public to more private investment.
“We still think growth could be robust – in the order of 7 percent in the medium term would not be unexpected,” said Lars Christian Moller, the World Bank’s lead economist in Ethiopia, in an interview on Monday.
It is estimated that Ethiopia’s economy grew 7 percent in the fiscal year July 8, 2012 to July 7, 2013, below the government’s 10 percent estimate.
Ethiopia’s US$43 billion economy would need to repeat its performance of the last decade to become a middle income country – defined by the bank as one with a gross national income (GNI) per capita of around US$1,430 in 12 years.
The World Bank put Ethiopia’s GNI at $410 in 2012.
