Ethiopia’s Economy Shows Unusual Resilience, Maintains Positive Growth

German Chancellor Angela Merkel, left, is welcomed by Ethiopia's Prime Minister Hailemariam Desalegn, as she arrives at the national palace in Addis Ababa, Ethiopia Tuesday, Oct. 11, 2016. Merkel is visiting Ethiopia, where her meeting with Prime Minister Hailemariam Desalegn is expected to focus on the country's newly declared state of emergency, after months of protests demanding wider freedoms, and other issues including migration. (AP Photo/Mulugeta Ayene)

The Ethiopian economy has shown unusual resilience in withstanding the last catastrophic drought that hit the country, Footprint to Africa reports.

The World Bank Group’s 5th Economic Update for Ethiopia pegs its 2016/2017 economic growth at eight per cent.

“This is impressive especially compared to previous drought situations which often resulted in economic contraction,” said Carolyn Turk, World Bank Country Director for Ethiopia, Sudan and South Sudan.

Despite recently facing the worst drought in fifty years, Ethiopia has remarkably maintained positive growth averaging 10.9 per cent for the last 10 years.

The country’s growth momentum will remain and will not be affected by the recent drought since the 2016 rains arrived as expected.

The newly completed Addis Ababa-Djibouti railway line is expected to significantly ease trade logistics and related constraints.

The government’s increased focus on the new Hawassa and Bole-Lemi Phase II industrial parks; increasing capacity in power generation; and completion of transmission lines to neighbouring Kenya and Sudan are also expected to improve export performance and stimulate medium-term growth.

The Update titled Why so idle? Wages and Employment in a Crowded Labor Market reveals that the country also managed to keep inflation under control, helping to avoid the erosion of the purchasing power of wages for workers of all education levels; keep real wages stable; and ensure positive returns on education in urban labour markets.

The Update is part of the World Bank’s economic policy dialogue with the government of Ethiopia.

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