Country Report Ethiopia June 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 14% in 2009 and 12% in 2010.
• The current-account deficit will remain stable at 7.8% of GDP in 2009, as falling imports are offset by lower private transfers. In 2010, as global demand edges up, the current-account deficit is expected to narrow to 6.9% of GDP.

Monthly review

• At the end of April security forces arrested over 30 people alleged to have been part of a plot to assassinate officials and attack infrastructure in the near future, claiming they were part of an illegal political group, Ginbot-7.
• In mid-May the World Bank executive board approved the release of US$540m over the next three years (from mid-2009 to mid-2012) for the second phase of the protection of basic services (PBS) programme.
• In a second major loan, in early June the World Bank board approved a low-cost loan worth US$245m for the fourth phase of the road sector development programme (RSDP).
• Falling water levels in hydroelectric dams have forced the Ethiopian Electric Power Corporation (EEPCo), the parastatal monopoly, to implement extensive load-shedding.
• Inflation fell to 14.1% year on year in May (from 23.3% in April) to reach the lowest level since September 2006, reflecting falling food prices.
• Ethiopia's industrial capacity took a step forward in mid-May with the official opening of the country's first glass factory after a two-year, Chinese-funded construction effort costing US$35m.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22