Country Report Ethiopia April 2009

Outlook for 2009-10

• The ruling Ethiopian People's Revolutionary Democratic Front (EPRDF) is expected to remain firmly in power over the forecast period.
• Political tensions will begin to rise during 2009 as all parties start to regroup and plan for the next general election, which is due in May 2010.
• Relations with Eritrea and insecurity in Somalia will continue to dominate the foreign policy agenda throughout the forecast period, and tensions in the region will remain high.
• Sustained growth in agriculture, horticulture and services will keep real GDP growth robust, at 6.8% in fiscal year 2008/09 (ending July 7th) and 7% in 2009/10, supported by steady inflows of donor aid and investment.
• Inflation is estimated to have averaged 44.4% in 2008 owing to strong increases in food and oil prices during the year. Monetary tightening and lower food and oil prices should bring the rate down to 15% in 2009 and 12% in 2010.
• The current-account deficit will widen to 6.7% of GDP in 2009 as the trade deficit continues to widen and GDP growth slows. In 2010, as global demand edges up, the current-account deficit is expected to narrow to 6.5% of GDP.

Monthly review

• The imprisoned leader of the opposition Union for Democracy and Justice (UDJ), Birtukan Mideksa, has launched a legal action, citing alleged violations of her constitutional rights as a prisoner.
• The private press has to re-register with the Ethiopian Broadcasting Authority (EBA)which now has responsibility for regulating the print media, following the passage of new, stricter laws earlier this year.
• The Ethiopian Revenue and Customs has launched a major campaign to collect unpaid business taxes from large taxpayers.
• Foreign-exchange shortages caused the East African Bottling Share Company (producers of Coca-Cola products) to cease production for two weeks in mid-March owing to lack of imported inputs.
• The foreign-exchange shortfall appears to be easing slightly, helped in part by US$50m in emergency IMF funding for balance-of-payments support.
• The government suspended the licences of six leading coffee exporters and 88suppliers in late March amid allegations of coffee hoarding by traders.
• Environmental and social concerns are threatening to delay the completion of Ethiopia's planned new super-dam, Gilgel Gibe III, which is scheduled to start producing electricity in 2012.

This report covers the following industry codes:
SIC Code: 20;60;47
NAICS Code: 311;52;48