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Fourth Ethiopia Economic Update : Overcoming Constraints in the Manufacturing Sector

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World Bank (WB)

Abstract: The Ethiopian economy continued its strong expansion in FY14 with real GDP growing by 10.3 percent. Growth was driven mainly by the services sector from the supply side and public investment from the demand side. At the same time, inflation has remained in single digits for the last two years on account of tighter monetary policy and lower international commodity prices. However, in recent months in 2015, domestic food prices are increasing partially as a result of shortage rainfall during the short rainy season. On the fiscal side, the budgetary stance at the general government level has been cautious. In an effort to adjust for the rising cost living, the FY15 budget incorporates an increase in public sector salaries after years of no increases which could also be the first step to adjust the balance between capital and recurrent expenditure. The salary increase accompanied by a supplementary budget in the middle of the fiscal year could potentially increase the budget deficit. The current account balance weakened. The deterioration is on account of a worsening trade deficit which was driven by weak export performance and large imports of capital goods for public investment programs. Goods exports showed positive growth in 2013-14 but rates remained far below their historical growth; furthermore, export growth fell into negative territory again in the last quarter of 2014 and first quarter of 2015. The strong economic growth in the past decade helped to reduce poverty significantly. The poverty headcount, measured by the national poverty line, fell from 38.7 percent in 2005 to 29.67 percent in 2011. Measured with the international poverty line (US$1.25 per day) Ethiopia saw the second fastest rate of reduction in Africa. Economic growth, particularly in agriculture, has been an important driver of poverty reduction in the last decade. Favorable weather conditions and improving terms of trade for rural producers have been reasons of this past trend supported by strong improvements in access to basic services and rural safety nets. Low levels of inequality have been maintained with the Gini coefficient remaining stable at 0.30.
Type: Report
Economic & Sector Work :: Economic Updates and Modeling
Economic & Sector Work
Link: http://hdl.handle.net/10986/22802
Subject: LIVING STANDARDS
TOTAL REVENUE
MONETARY POLICY
CAPITAL MARKETS
REGULATORY FRAMEWORK
UNEMPLOYMENT RATES
ECONOMIC GROWTH
OIL PRICE
PRODUCTION
LAGS
NATIONAL ECONOMY
STRUCTURAL CHANGE
DISPOSABLE INCOME
INCOME
EXPECTATIONS
REAL GDP
EXCHANGE
GOVERNMENT REGULATION
ECONOMIC DEVELOPMENTS
GDP PER CAPITA
LIQUIDITY
EXPORTS
DOMESTIC MARKET
POLITICAL ECONOMY
FISCAL POLICY
WELFARE
BONDS
INCENTIVES
DEVALUATION
CAPACITY BUILDING
MOV
REAL INCOME
INPUTS
PAYMENTS
FREE TRADE
INFLATION
REGIONAL PRODUCTIVITY
TRENDS
SAFETY NETS
ECONOMIC OUTLOOK
DEVELOPMENT
SMALL BUSINESS
OIL PRICES
TOTAL FACTOR PRODUCTIVITY
TECHNICAL ASSISTANCE
COSTS
PER CAPITA INCOME
GOVERNMENT REGULATIONS
EXPORT GROWTH
COMMERCIAL BANK
MONEY
RENT
DEVELOPMENT STRATEGIES
FIXED COSTS
PRODUCTIVITY
INDUSTRIALIZATION
FAILURES
MONOPOLY
CRITERIA
PRICE DECLINES
DEBT
MARKETS
NET EXPORTS
INCOME LEVELS
POTENTIAL OUTPUT
ENTRY BARRIERS
TAX REVENUES
DIVIDENDS
UTILITY
NATURAL RESOURCES
GROSS DOMESTIC PRODUCT
INVENTORY
FINANCE
TAXES
UNEMPLOYMENT
PRODUCTIVITY GROWTH
CONSUMPTION
HUMAN CAPITAL
VALUE ADDED
CAPITAL
WAGES
UNEMPLOYMENT RATE
FUTURE
VALUE
BENCHMARKING
COMPETITIVENESS
CREDIT
TREASURY BILLS
TRADE DEFICIT
DEVELOPMENT STRATEGY
COMPARATIVE ADVANTAGES
DEMAND
ECONOMY
AGRICULTURE
CONSUMERS




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