PM Abiy Ahmed speaking at the parliament on Tuesday, November 10, 2022

Govt Expects Ethiopia’s Economy to Expand by 7.5% this year

ADDIS ABABA – Prime Minister Abiy Ahmed said Ethiopia’s economic growth will accelerate further, projecting it to expand by 7.5% in the 2022/23 Fiscal year.

The projection is a 1.1 percentage point higher than the economic growth rate registered last year.

Speaking to parliamentarians today, Prime minister Abiy Ethiopia’s economy held up under pressure and reached $127.6 billion, “demonstrating that our economy is unbreakable and will continue to grow.”

“The per capita income reached $1,212. According to the World Bank, the economy has risen to first in East Africa and third in Sub-Saharan Africa,” the PM noted.

“However, we do not agree with the report in its entirety,” said the PM. “Because Ethiopia has both formal and informal economic activity, we believe it has achieved greater growth than the report indicates.”

According to the prime minister, the government will build on the economic growth registered last year.

The Gross Domestic Production (GDP) increased by 6.4% in 2014 E.C, he said. “Our goal for this year is 7.5 % growth.”

The World Bank’s Africa Pulse October report says Ethiopia may struggle to regain its pre-pandemic performance due to the prolonged conflict in the northern part of the country. The bank, however, expects the country’s real GDP to grow steadily from 5.3% in 2023 (up from 3.5%) to 6.1% in 2024. 

On the demand side, the expansion is on the back of a recovery in investment (7.2%) after a weak performance in 2022 (1.6%), the report says. “On the supply side, the agriculture sector will pick up due to improved weather conditions.”

Inflation Remains a challenge

The East African nation has been struggling with double-digit inflation since July 2017.

As per the Africa Puls report, the cost of living increased sharply in 2021 from about 19.3% in January to 35.1 percent in December and remained steady at this level in 2022.

The PM, however, says the inflation rate is decelerating. For the past four months, the PM said inflation has been declining “as a result of the measures implemented.”

“Monitored food distribution, Sunday market, student feeding programs, and meal sharing have all contributed to this,” the PM said.

The focus should now be on long-term solutions to bring the inflation rate down to a single digit.

“We must prioritize long-term solutions over short-term fixes,” he said. “We should reduce waste, share with those who don’t have it, keep producing, avoid theft and laziness, choose peace over conflict, diligence over laziness, and honesty over theft.”

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