The Daily Monitor, Addis Abeba — Ethiopia's economic growth could slow to 6 percent in 2009 as the world slowdown is likely to hit its coffee export, tourism, and transportation the country's leading foreign exchange earners, the International Monetary Fund (IMF) said on Wednesday.
This is seen to largely contradict with the 12.8 percent economic growth maintained by the government.
Last month, Prime Minister Meles Zenawi said he saw only a 0.6 percent slide from the 12.8 percent economic growth last year owing to the world economic downturn, and said that was not to be considered significant compared to the economic achievements the country is registering, "in the face of the global financial crisis" "It is projected that the global crisis will continue to prevail for the next two or three years, on our side there is a hope that our economy will continue to grow at the same pace," Meles told a press conference at his office.
But what did the IMF say on Wednesday?
The IMF said the country is one of the vulnerable countries to the unfolding crisis and it is expected to register only about 6% economic growth.
It said Ethiopia is in fact among the poorest the global financial crisis will weigh heavily on and it called for the international community to act "urgently" and "generously" to avoid devastating effects.
Speaking during a round table with the media and stake holders IMF Country Representative Sukhwinder Singh admitted the country was one of the fastest growing non-oil producing countries in Africa.
All the same, the country was no exception and will certainly be affected by the global downturn which is playing its ugly faces in all countries of the world-rich and poor, he said.
He said the impact on Ethiopia will be as bad as a six percent slash from what it managed to register last year.
The decline in export demand of coffee and its decreased price by 19%, the depreciation of effective foreign exchange rates by 30% last year, less tourism and revenue from airway transport are cited as the major factors behind the country's poor economic performance this year.
85% of exports are going to industrial and emerging market countries who are already suffering major import declines.
He, however, indicated that the country could grasp positive advantage with the lower oil and fertilizer price at the global market.
He noted that in the middle of the year, USD 220 million Ethiopia incurred for importing oil has now gone down to USD 75 million.
He highlighted that, due to the shock induced by global crisis, economic growth projection in pre-crisis and at present is greatly varies.
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The IMF forecasted the growth in SSA to be 5% a little bit earlier but it now expects only 3%, Sukhwinder said.
Current account balance in Ethiopia as elsewhere in SSA is worsening and it is currently -5.4% (while it is -2.6% in SSA) with low reserve level but risks are mounting, he said.
"We need 25 billion dollar concessional financing for Ethiopia and SSA as a whole who are most affected countries" he said.
He further indicated that Ethiopia has the highest inflation rate in Africa outside Zimbabwe (26%) and much weaker in fiscal reservation. The average in SSA is 2%.
The International Monetary Fund (IMF) Managing Director Dominique Srauss-Kahn on Tuesday heralded that after first striking the advanced economies and then emerging markets, a third wave of the global financial crisis has begun to hit the world's poorest and most vulnerable countries, threatening to undermine recent economic gains and to create a humanitarian crisis He also called on the international community to act urgently and generously to avoid the potentially devastating effects of the global financial crisis on the most vulnerable countries. Similarly, the report by the UN Educational, Scientific and Cultural Organization (UNESCO) said that the world's poorest countries including Mozambique, Ethiopia, Mali, Senegal, Rwanda and Bangladesh are unable to insulate their citizens from the crisis, with an estimated 43 out of 48 low-income countries incapable of providing a pro-poor government stimulus According to UNESCO, reduced growth in 2009 will affect the 390 million people in sub-Saharan Africa living in extreme poverty and a loss of income around USD 18 billion (USD 46 per person).
ILO last month on its part announced that Ethiopia, Kenya and Tanzania, the three East African countries that have reaped from the Western economic growth, are suffering from the reduction of prices in the West as supermarket chains take unilateral commodity price cuts.
