Country Report Ethiopia March 2009

Summary

The ruling Ethiopian People's Revolutionary Democratic Front (EPRDF) is expected to remain firmly in power over the outlook period.
Political tensions will begin rising 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 outlook 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 6.9% 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.

Several opposition parties, including the two largest, agreed in February to form a new coalition, the Forum for Democratic Dialogue in Ethiopia (FDDE).
The leader of the opposition Unity for Democracy and Justice, Birtukan Mideksa, remains in prison despite growing pressure for her release from the opposition, civil society and diplomats.
Ethiopia has continued to move gradually towards becoming a member of the World Trade Organisation (WTO)a process that was launched in 2003.
The government has reiterated that it has no intention of opening up the banking or telecommunications sectors to foreign ownership.
The services sector was the star performer during 2007/08, growing by 17% and supporting overall GDP growth of over 11%.
Inflation continues to subside, falling to 37.8% year on year in January, although prices edged up by 0.4% on a month-on-month basis.
Ethiopias burgeoning floriculture sector continues to post rapid growth, with export earnings rising by 76% year on year to US$112m in the 2007/08, from almost zero, five years ago.
Private banking has continued to expand with new banks opening and new partnerships being formed.

This report covers the following industry codes:
SIC Code: 70
NAICS Code: 72