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workforce. Manufacturing accounts for to improve first- and last-mile railway
less than 10% of GDP. On the demand connectivity, will produce efficiency
side, private consumption and domestic gains in trade and manufacturing.
investment were the primary growth Ethiopia’s public-private partnership
drivers in 2019, but domestic investment framework will diversify the country’s
slowed, reflecting fiscal consolidation. development finance sources, improve
Monetary policy was tight. But inflation debt sustainability, and sustain growth-
remained in double digits in 2019 and generating infrastructure investments.
above the 8% central bank target because Ongoing financial reforms, particularly
of central bank advances to finance the to develop a capital market, will enhance
Sahle-Work Zewde, President of Ethiopia
fiscal deficit. Ethiopia’s managed float domestic resource mobilization.
exchange rate foresees a 5%–6% annual According to a recent editorial in
depreciation to adjust for inflation
Economic growth differentials with trading partners. the Financial Times, “Ethiopia has
The economy of Ethiopia is a mixed and High inflation has, however, contributed transformed in 20 years from a famine-
ravaged nation into a destination for
transition economy with a large public to overvaluation of the Ethiopian savvy and well-known private equity
sector. The government of Ethiopia is in birr despite the 15% devaluation in groups such as KKR.”
the process of privatizing many of the state 2017, necessitating a gradual shift to
owned businesses and moving toward a a more competitive exchange rate. Ethiopian formerly Ethiopian Air Lines
market economy. However, the banking, Fiscal consolidation has ensured low (EAL) and often referred to as simply
telecommunication and transportation and stable fiscal deficits, despite a low Ethiopian, is Ethiopia’s flag carrier and is
sectors of the economy are dominated by tax–GDP ratio, averaging 11% during wholly owned by the government. EAL
government owned companies. 2016–19. Tax reforms are under way to was founded on 21 December 1945 and
Ethiopia has one of the fastest-growing boost revenue mobilization, but deficit commenced operations on 8 April 1946,
expanding to international flights in
economies in the world and is Africa’s financing through central bank advances 1951. The firm became a share company
second most populous country. Many has fueled inflation and reduced
properties owned by the government monetary policy effectiveness.
during the previous regime have now Current account deficits have stabilized
been privatized and are in the process of because of the phased reduction of
privatization. import-intensive capital projects- in
However, certain sectors such as line with the government’s strategy
telecommunications, financial and of reducing external borrowing- and
insurance services, air and land been partly offset by official and private
transportation services, and retail, are transfers. Ethiopia’s debt sustainability
considered as strategic sectors and are rating deteriorated to high risk in
expected to remain under state control for 2018 because of worsening terms of Ethiopian GDP growth
the foreseeable future. trade and the subsequent weak export
Almost 50% of Ethiopia’s population is performance.
under the age of 18, and even though Gives Ethiopia The World Bank a in 1965 and changed its name from
education enrollment at primary and positive economic outlook, projecting Ethiopian Air Lines to Ethiopian Airlines.
tertiary level has increased significantly, real GDP growth to stabilize at 7.1%–
job creation has not caught up with 7.2% in 2020–21 due to ongoing political Ethiopian Airlines Group is the largest
the increased output from educational and economic reforms and normalizing Aviation Group in Africa and SKYTRAX
institutes. The country must create relations with Ethiopia’s neighbors. certified Four Star Global Airline. It
hundreds of thousands of jobs every year Growth should benefit from the has been ranked as the ‘Best Airline in
just to keep up with population growth. Homegrown Economic Reform Africa’ for the third consecutive year at
Program, which seeks to address the Skytrax 2019 World Airlines Awards.
Macroeconomic performance and macroeconomic imbalances and unlock The main religions in Ethiopia are
Islam,
Christianity,
and
Judaism
outlook structural and sectoral bottlenecks, Paganism. Ethiopia is a predominantly
Real GDP growth slowed to an estimated improving governance of state- Christian country and the majority of
owned enterprises and strengthening
7.4% in 2019 from 7.7% in 2018, caused institutional capacities. Christians are Orthodox Tewahedo
by social unrest and fiscal consolidation Christians, who belong to the Ethiopian
to stabilize the public debt. On the supply Measures to open key sectors to Orthodox Tewahedo Church.
side, industry and services continued to competition - notably transport,
lead growth in 2019. Industry was driven logistics, manufacturing, and There are a minority of Christians who
by construction, notably for industrial telecommunication- will attract private are Roman Catholic or Protestant. The
parks and infrastructure investments. investment, catalyze high value-added Ethiopian Orthodox Tewahedo Church
Structural transformation is under way services, and boost competitiveness. is headed by a patriarch and is related to
but needs to accelerate. While agriculture’s Transport investments, such as the Addis the communion of the Coptic Orthodox.
share in GDP has fallen, the sector still Ababa- Djibouti railway, and ongoing Ethiopia’s currency is the Birr currently
employs more than 70% of Ethiopia’s logistics reforms, including measures exchanging USD 1 to ETB 33.6.

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