Thursday, October 10, 2013

Ethiopia's economy grew 9.7 pct in 2012/13, missing target

Ethiopia, whose biggest export crop is coffee, saw a dip in exports after international prices for coffee declined by about a third during the year under review
Ethiopia's economy grew 9.7 percent in the 2012/13 fiscal year, below the 11 percent initially expected, held back by lower than expected prices for its main exports, a senior government official said on Wednesday.

Agriculture accounted for 43 percent of output.

Ethiopia, whose biggest export crop is coffee, saw its overall exports dip to less than $3 billion from $3.15 billion in the previous year.

The World Bank says international prices for coffee declined by about a third during the year under review.

"Globally, the market for commodities was not favourable. Coffee prices declined and so did gold prices," said Abraham Tekeste, state minister of finance and economic development.

"We are working to increase volume and seek more destinations to boost exports," he told reporters.

Heavy public spending on infrastructure helped to boost growth to 8.5 percent in 2011/12, making Ethiopia one of Africa's fastest growing economies.

Year-on-year inflation averaged 20 percent in 2011/12, but it has since been falling, standing at 8.7 percent last month.

The International Monetary Fund said this year that balance of payments pressures and the difficulties faced by the private sector raised doubts about the sustainability of Ethiopia's growth model.

Private investment in Ethiopia as a share of GDP is the sixth lowest in the world.

The fund said public spending on mega-dams, roads, schools and other infrastructure required massive domestic funding, which was hampering the private sector's access to credit.

The World Bank sees growth averaging 7 percent for the next three to five years.

Ethiopia, Africa's second most populous country after Nigeria, is midway through a five-year economic plan that aims to expand the road network to 136,000 km (84,500 miles) by 2015 from below 50,000 km in 2010.

It also plans to construct 5,000 km of railway lines by 2020.

Abraham dismissed concerns about whether the government would be able to secure sufficient funding.

"All infrastructure projects have reliable sources of financing. There is no revision. We will continue to implement our infrastructure projects," he said.

Ethiopian officials say they hope to secure funding from the BRICS countries: Brazil, China, India, Russia and South Africa.