2012年-世界发展银行全球_Ethiopia_Economic_Update_November_2012___Overcoming_Inflation_Raising_Competitiveness_52页_3mb

Ethiopia Economic Update: Overcoming Inflation, Raising Competitiveness

Core Content Summary

This document provides an economic overview of Ethiopia from 2004 to 2012, focusing on inflation control and competitiveness enhancement. It draws comparisons with the development experiences of China and South Korea, highlighting key indicators and policy frameworks.

Economic Overview

Ethiopia has experienced strong and broad-based real economic growth of around 10.6% on average between 2004 and 2011. This growth outperformed the average for Sub-Saharan Africa, which was around 5.2%. The economy is expected to stabilize at 7-8% growth in 2012, driven by improved agricultural performance and rising foreign investment and exports.

Inflation has remained high but has shown a slight decreasing trend. In 2011, headline inflation exceeded 33%, but by August 2012, it had dropped to 20.2%. The reduction is attributed to tighter fiscal policies and monetary base control by the Government of Ethiopia (GoE). However, the inflation rate remains a concern as it may reverse recent poverty reduction efforts.

Poverty levels have decreased over the years, with the percentage of the population living below the national poverty line (less than US$0.6 per day) dropping from 38.7% in 2004/05 to 29.6% in 2010/11. The Growth and Transformation Plan (GTP) aims to further reduce this to 22.2% by 2014/15.

The External Sector

Ethiopia has pursued a strategy of increasing exports to drive growth, given the limited size of its domestic market. Goods exports grew by 14.8% in 2011/12, with coffee and gold as the main exports. Coffee exports declined due to changes in shipment regulations, while gold exports increased with higher unit prices.

Services exports have shown strong performance, with Ethiopia being one of the few large, landlocked economies that export more services than goods. This is a key area that has been underutilized but holds significant potential.

The trade deficit has widened significantly, increasing by 43% from US$5.5 billion in 2010/11 to US$7.9 billion in 2011/12. This is due to a larger increase in imports (33%) compared to exports (14.8%). The current account balance is negative, reflecting the excess of investment over savings.

Fiscal Policy

Ethiopia's fiscal deficit improved from 1.6% of GDP in 2010/11 to 1.2% in 2011/12. The deficit is largely financed through external project loans and privatization receipts. Tax reforms initiated in 2010 have led to significant improvements in tax collection. Public financial management reforms are also underway to strengthen the expenditure side, including a shift towards program-based budgeting.

Public debt is on a declining trend and is expected to remain below 35% of GDP in 2011/12. The country is at a low risk of external debt distress, as indicated by recent sustainability analyses.

The Growth and Transformation Plan (GTP)

The GTP outlines ambitious targets for Ethiopia's development between 2010 and 2015. The plan requires substantial financing, estimated at US$57.4 billion, to support on-budget capital and off-budget expenditures. To achieve this, Ethiopia needs to improve the investment climate and increase private sector participation, both domestic and foreign.

Inflation and Its Impact on the Poor

High inflation rates have had a significant impact on the poor, especially in the context of rising food and electricity prices. The welfare impact of recent price shocks is analyzed using nationally representative datasets, showing that inflation disproportionately affects lower-income groups.

The methodology used to assess inflation impacts includes both headline and effective inflation rates. Effective inflation rates vary by region and quintile, with the poorest groups facing the highest inflationary pressures.

Agglomeration and Competitiveness

Agglomeration effects are important for Ethiopia's economic growth. Addis Ababa, as the economic hub, has higher economic density compared to its neighbors and international cities. Its per capita revenues are significantly higher than other regions.

Improving competitiveness is essential for Ethiopia's economic development. Lessons from East Asian experiences, particularly South Korea and China, highlight the importance of special economic zones (SEZs), technology transfer, and private sector involvement.

Key Recommendations for Competitiveness

• Special Economic Zones (SEZs): Ethiopia should develop SEZs to attract foreign investment and improve productivity.
• Technology Transfer: Encourage joint ventures between state-owned enterprises (SOEs) and foreign investment enterprises (FIEs) to enhance technological capabilities.
• Investment Climate: Improve the investment climate to attract more private and foreign capital.
• Financial Development: Increase domestic savings and improve financial development indicators such as real interest rates and monetization.
• Sectoral Opening: Open more sectors to foreign investment to increase FDI inflows and diversify the economy.

Main Growth Periods and Indicators

Key Acronyms

• AACAREP: Addis Ababa City Administration Revenue Enhancement Plan
• KEPCO: Korea Electric Power Company
• KT: Korea Telecom Corporation
• COMESA: Common Market for Eastern and Southern Africa
• MOFED: Ministry of Finance and Economic Development
• CSA: Central Statistics Agency of Ethiopia
• NBE: National Bank of Ethiopia
• NEER: Nominal Effective Exchange Rate
• EAC: East African Community
• POSCO: Pohang Steel and Iron Corporation
• EEPCO: Ethiopia Electric Power Company
• EFY: Ethiopian Fiscal Year
• REER: Real Effective Exchange Rate
• SSA: Sub-Saharan Africa
• FDI: Foreign Direct Investment
• SEZ: Special Economic Zone
• FEZ: Free Export Zone
• FIE: Foreign Invested Enterprise
• FTA: Free Trade Agreement
• SOE: State-owned Enterprise
• VAT: Value Added Tax
• WTO: World Trade Organization

Conclusion

Ethiopia has made significant progress in economic growth and poverty reduction, but faces challenges in sustaining high growth and managing inflation. The country is inspired by East Asian development experiences, particularly in terms of export-led growth and competitiveness. To continue this trajectory, Ethiopia needs to improve its investment climate, increase domestic savings, and open more sectors to foreign investment. These efforts are expected to enhance the country's economic performance and reduce the impact of inflation on the poor.