Economy
Can Ethiopia's economy withstand the compounded pressures of war and drought?
Deutsche Welle · 3 hours ago · Read the Full Story on Deutsche Welle
AI SUMMARY
Ethiopia's economy faces severe strain as the resurgence of conflict, rising inflation, currency depreciation, and El Niño-induced drought threaten agricultural production and government budgets.
- Out of Ethiopia's 2.4 trillion Birr budget for 2019, 96.3 billion Birr was allocated to defense.
- El Niño weather conditions have delayed rainfall by up to four weeks between June and September across northeastern and southeastern Ethiopia.
- Regions facing severe strain from the drought include northern Amhara, West and West Hararghe, Afar, and Tigray.
- The Famine Early Warning Systems Network projects that Ethiopia's national Meher harvest will likely be below average.
- Economist Dr. Yetsedaw Emagnu warns that agricultural damage from El Niño will hinder economic growth and jeopardize poverty reduction efforts.
- Pastoralists in drought-affected areas are forced to sell livestock to cover food consumption, creating long-term economic gaps.
- The resurgence of conflict in northern Ethiopia has disrupted fuel supplies, market activity, and transportation.
- Residents in Mekelle, the capital of Tigray, report shortages of basic goods and sharp price increases.
- Prime Minister Abiy Ahmed's government aims to reduce inflation to a single digit in 2019, down from 15.1 percent in August 2018.
- The IMF projects Ethiopia's inflation rate at 11.7 percent for the year and 12.3 percent by 2027.
- Defense spending and war-related diversions are expected to worsen a budget deficit estimated to exceed 300 billion Birr.
- The official National Bank exchange rate is around 160.85 Birr per dollar, while the parallel market rate exceeds 200 Birr.
- A previous war in Ethiopia resulted in hundreds of thousands of deaths, millions of displaced persons, and an estimated 28.7 billion USD in property damage.
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