Ethiopia is a country in transition undergoing a comprehensive and fundamental societal transformation to create a pluralistic society based on a market economy and the rule of law. Thanks to its economic successes, Ethiopia has made significant progress in reducing poverty: every hour, 276 people can be brought out of extreme poverty, says the Vienna-based World Poverty Clock; in neighboring Kenya, the number is only 36. Ethiopia is thus well on its way to achieving the UN's Sustainable Development Goals and realizing a middle-income status by 2030 as the only East African country.
As the Ethiopian economy progresses, resources are reallocated from agriculture to the industrial and service sector. The industrial part of the economy plus the mining industry now accounts for 7% of the country's economic output, indicating that the industry is still at an early stage. Thus, policies that increase the linkage between agriculture and industry are preferable as they drive the GDP growth.
Drawing on a deeply entrenched experience of statehood, the present Ethiopian regime has embarked on an ambitious program, yet ultimate success will depend on the capacity to transform a state that has itself been central to the development process.
The Economist Intelligence Unit forecasts that Ethiopia will grow by 7% by 2020, compared to 2% -3% in the continent. In 2017, the direct investment inflows of $ 3.6 billion were more than five times higher than in Kenya. By 2018, direct investment was $ 4 billion. Investments are in the areas of textiles, clothing, leather, agricultural-processing, and pharmaceuticals. Imports are used to a large extent by the state to build their power plants and industrial parks. Private consumption is expected to grow by around 6% in 2020. In terms of real changes in government consumption, the EIU expects increases of 12 percent for 2020.
About Baden-Württemberg International
East Africa Partners Consultancy PLC, State Office Baden Württemberg East Africa, advises you for your ventures in East Africa and Ethiopia. We work with domestic and foreign companies, research institutes, and universities. We support you with your business in Ethiopia by facilitating all steps, connecting you to relevant partners, and advocating for your interests. Our market know-how enables you to move faster. Find out more about Baden Württemberg International
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