Ethiopia Becomes Second Fastest Growing Economy in SSA

[PasserBy]

A more hopeful continent

 

The lion kings?

 

Jan 6th 2011 | from PRINT EDITION

 

..MUCH has been written about the rise of the BRICs (Brazil, Russia, India and China) and the shift in economic power eastward as Asia outruns the rest of the world. But the surprising success story of the past decade lies elsewhere. An analysis by The Economist finds that over the ten years to 2010, no fewer than six of the world’s ten fastest-growing economies were in sub-Saharan Africa (see table).

 

The only BRIC country to make the top ten was China, in second place behind Angola. The other five African sprinters were Nigeria, Ethiopia, Chad, Mozambique and Rwanda, all with annual growth rates of around 8% or more. During the two decades to 2000 only one African economy (Uganda) made the top ten, against nine from Asia. On IMF forecasts Africa will grab seven of the top ten places over the next five years (our ranking excludes countries with a population of less than 10m as well as Iraq and Afghanistan, which could both rebound strongly in the years ahead).

 

Over the past decade sub-Saharan Africa’s real GDP growth rate jumped to an annual average of 5.7%, up from only 2.4% over the previous two decades. That beat Latin America’s 3.3%, but not emerging Asia’s 7.9%. Asia’s stunning performance largely reflects the vast weight of China and India; most economies saw much slower growth, such as 4% in South Korea and Taiwan. The simple unweighted average of countries’ growth rates was virtually identical in Africa and Asia.

 

.Over the next five years Africa’s is likely to take the lead (see chart). In other words, the average African economy will outpace its Asian counterpart. Looking even farther ahead, Standard Chartered forecasts that Africa’s economy will grow at an average annual rate of 7% over the next 20 years, slightly faster than China’s.

 

So it should, of course. Poorer economies have more potential for catch-up growth. The scandal was that Africa’s real GDP per head fell for so many years. In 1980 Africans had an average income per head almost four times bigger than the Chinese. Today the Chinese are more than three times richer. Africa’s rapidly rising population still dampens its growth in real income per head but that, too, has risen by an annual rate of 3% since 2000—almost twice as fast as the global average.

 

For Western firms Africa’s economy still looks tiny, accounting for only 2% of world output. Emerging Asia’s is ten times larger. But Africa’s share is rising, not only because of brisker growth but because GDP has been seriously understated in many economies. In November the size of Ghana’s economy was revised up by a massive 75% after government statisticians improved their data and added in industries such as telecoms. Other countries are likely to revise their GDP levels and growth rates upward over the coming years.

 

Africa’s changing fortunes have largely been driven by China’s surging demand for raw materials and higher commodity prices, but other factors have also counted. Africa has benefited from big inflows of foreign direct investment, especially from China, as well as foreign aid and debt relief. Urbanisation and rising incomes have fuelled faster growth in domestic demand.

 

Economic management has improved, too. Government revenues have been bolstered in recent years by high commodity prices and rapid growth. But instead of going on a spending spree as in the past some governments, such as Tanzania’s and Mozambique’s, have put money aside, cushioning their economies in the recession.

 

Some ambled through the decade rather than sprinted. Africa’s biggest economy by far, South Africa, is one of its laggards: it posted average annual growth of only 3.5% over the past decade. Indeed, it may be overtaken in size by Nigeria within ten to 15 years if Nigeria’s bold banking reforms are extended to the power and the oil industries. But the big challenge for all mineral exporters will be providing jobs for a population expected to grow by 50% between 2010 and 2030.

 

Commodity-driven growth does not generate many jobs; and commodity prices could fall. So governments need to diversify their economies. There are some glimmers. Countries such as Uganda and Kenya that do not depend on mineral exports are also growing faster than before, partly because they have increased manufacturing exports. Standard Chartered thinks that Africa could become a significant manufacturing centre.

 

Formidable obstacles to Africa’s continued progress loom, among them political instability, the weak rule of law, chronic corruption, infrastructure bottlenecks, and poor health and education. Without reforms, Africa will not be able to sustain faster growth. But its lion economies are earning a place alongside Asia’s tigers.

[PasserBy]

The changing face of Ethiopia

 

[Thierry Henry]

Read your graph carefully, it states it doesn’t include population under 10 million.

 

Latest growth forecasts for 2011 - Economist

 

 

Actually, the second fastest growing Africa country in 2011, is none other than your Eritrean brothers who made you landlocked

[PasserBy]

Mr T,

 

It is indisputable fact that Ethiopia has been registering remarkable economic growth in the last 5 years. As for 2011, it is just a forecast. We will have to see. So I say DON'T GET MAD. BE HAPPY. You should strive to be part of the change Ethiopia is witnessing. Time is of the essence. You snooze you lose. Get a job. Save money and invest in region 5.

[Thierry Henry]

With the insanely high inflation and now ridiculous price caps along with brutal government rule, there is no incentive for investment

 

The only investment in Ethiopia today is from Asian/Arab countries such as Egypt, Saudi, and India who are obtaining food security for their people while million of Ethiopians go home hungry. Still waiting for the 3 meals a day Zenawi promised in 1995 LOL

[PasserBy]

You are so pessimistic. No wonder many Ethio Somalis are abandoning A Osman' camp. :eek:

[Thierry Henry]

PasserBy;688323 wrote:

You are so pessimistic. No wonder many Ethio Somalis are abandoning A Osman' camp. :eek:

Some more red herring from TPLF supporters, why am I not surprised at all?

[Faafan]

The Economy of Ethiopia is a Government run monopoly, true to Meles's Marxist roots.The IMF and World Bank who prop up these dictators have even shied away from agreeing with there Gunea Pig.

 

The Economist called "“The Ethiopian government, one of the most economically illiterate in the modern world....".In another slap in the face they debunked his fictitious statistics of amazing growth(almost 11%) and said Ethiopia was growing at the average rate in Sub-Saharan Africa or just a little above.

 

On November 3, 2007, the Economist magazine reported

 

The fact is that for all the aid money and Chinese loans coming in, Ethiopia's economy is neither growing fast enough nor producing enough jobs. The number of jobs created by flowers is insignificant beside an increase in population of about 2m a year, one of the fastest rates in Africa.... The government claims that the economy has been growing at an impressive 10% a year since 2003-04, but the real figure is probably more like 5-6%, which is little more than the average for sub-Saharan Africa. And even that modestly improved rate, with a small building boom in Addis Ababa, for instance, has led to the overheating of the economy, with inflation moving up to 19% earlier this year before the government took remedial action. The reasons for this economic crawl are not hard to find. Beyond the government-directed state, funded substantially by foreign aid, there is--almost uniquely in Africa--virtually no private-sector business at all.

The IMF estimates that in 2005-06 the share of private investment in the country was just 11%, nearly unchanged since Mr Zenawi took over in the early 1990s. That is partly a reflection of the fact that, despite some privatisation since the centralised Marxist days of the Derg, large areas of the economy remain government monopolies, closed off to private business. This is where Ethiopia misses out badly. Take telecoms. While the rest of Africa has been virtually transformed in just a few years by a revolution in mobile telephony, Ethiopia stumbles along with its inept and useless government-run services.... There is no official unemployment rate, but youth unemployment, some experts reckon, may be as high as 70%. All those graduates coming out of state-run universities will find it very hard to get jobs. The mood of the young is often restless and despairing; many dream of moving abroad.... Just as the government is slowing the pace of economic expansion for fear that individuals may accumulate wealth and independence, so it is failing to move fast enough from a one-party state to a modern, pluralist democracy. Again, the reason may be that it is afraid to.

 

 

The Heritage Foundation, the pre-eminent conservative American think tank echoes the Economist in its 2010 Index of Economic Freedom concluded:

 

Ethiopia underperforms in many of the 10 economic freedoms. The business and investment regime is burdensome and opaque. The overall quality and efficiency of government services have been poor and are further undermined by weak rule of law and pervasive corruption. Monetary stability is hampered by state distortions in prices and interest rates, and trade freedom is hurt by high tariff and non-tariff barriers…. All imports must be channeled through Ethiopian nationals registered as official import or distribution agents with the Ministry of Trade and Industry. Foreign participation is prohibited in domestic banking, insurance and microcredit services, and several other activities…. Ethiopia ranks 126th out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008. Despite legal restrictions, officials have been accused of manipulating the privatization process, and state-owned and party-owned businesses receive preferential access to land leases and credit.

.........

 

Zenawi is desperate to show economic development of epic proportions in Ethiopia after nearly 2 decades of clinging to power. The fact remains that despite the incredible claims of economic growth, tens of millions of people are starving and go without any health care. Millions of young people remain unemployed and trapped in hopelessness. There is no rule of law and human rights violations are widespread. Whether or not Zenawi's regime has accomplished an economic feat with few rivals in modern history is not a matter of wishful thinking or public relations. It is a matter of evidence: accurate, complete, reliable and comprehensive statistical evidence that is systematically and carefully collected, analyzed and verified. Such evidence can not be invented, fabricated, manufactured, contrived, concocted or cut from whole cloth. Benjamin Disraeli, the 19th Century British prime minister said, "There are three kinds of lies: lies, damned lies, and statistics." In Ethiopia today, we are witnessing all three!

 

 

Source- http://www.huffingtonpost.com/alemayehu-g-mariam/ethiopia-the-voodoo-econo_b_542298.html

[PasserBy]

Addis Ababa , January 18, 2011 (Addis Ababa) - Ethiopia has registered a 12.7 per cent economic growth in 2010, the United Nations annual economic report, World Economic Situation and Prospects (WESP) said.

 

Speaking at a press conference organized to release the WESP, UNECA Chief Economist, Adam Elhiraika said Ethiopia has registered fast economic growth between 2000 and 2010.

 

Elhiraika said the country has invested huge amount of money in infrastructure, education, health and agriculture sectors, among others, during the past ten years.

 

The Economist said the country has also managed to increase the volume of agricultural outputs during the reported period.

 

According to Elhiraika, the huge investment made by the government in the sectors contributed towards economic growth of the country.

 

Though the Ethiopian government had estimated the country's economy to grow by 10.1 per cent, the economy has grown by 12.7 per cent due to the overall development in all sectors.

 

Despite the continuous increase in the volume of agricultural outputs, the price for agricultural products remains high, the economist said.

 

The inflation rate has lowered in 2010 compared to the previous year, he said.

 

Elhiraika said the country’s economy is estimated to grow by 9.4 per cent and 9.2 per cent on average during 2011 and 2012 respectively.

 

He said the recovery of the global economy from the downturn caused by the global crisis creates good opportunity for Africa to register better economic growth.

 

Elhiraika said the continent has registered fast development in tourism and expansion of telecommunication service and huge flow of foreign direct investment during 2010.

 

Africa registered a 4.7 per cent economic growth in 2010, he said, adding, the continent expects to grow by five per cent and 5.1 per cent during 2011 and 2012 respectively.

 

He said political unrest, conflict, dependency on agricultural products and price hike in food items will be problems for the continent's economic growth.

[Xaaji Xunjuf]

Well done Ethiopia

[PasserBy]

Indeed, Well Done Ethiopia.