Ethiopia Sees Economic Growth at 11%

Ethiopian Central Bank
Ethiopia is experiencing steady economic growth

Ethiopia’s economy is expected to maintain a growth rate of 11 percent in 2012/2013, newly-appointed premier Hailemariam Desalegn said on Tuesday, predicting a slump in crippling inflation rates that have plagued the country in recent years.

“Our economy has grown by a growth rate of over 11 percent in the past few years and we estimate this rate to be maintained this fiscal year,” he told lawmakers on Tuesday during his first appearance in parliament as the country’s leader.

The International Monetary Fund in June raised its economic growth forecast for Ethiopia to 7 percent from 5.5 percent owing to slowing inflation.

Official estimates have tended to be generally higher than the Washington-based body’s growth projections.

Hailemariam was sworn in last month after his long-standing predecessor Meles Zenawi died from illness in August.

Under Meles, the Horn of Africa nation embarked on ambitious infrastructure projects to improve its economic competitiveness, including a multi-billion dollar plan to scale up energy generation.

Inflation, however, soared during his last four years in power, peaking at 64 percent in July 2008.

The rate slowed to 19 percent last month from 20.2 percent in August, helped by a slowdown in the rate of food price rises.

“We have managed to lower inflation by subsidising oil and wheat. We will work to raise agricultural productivity, subsidies and savings to reduce the inflation rate to single-digits this year,” Hailemariam said.

The IMF has said tight monetary and fiscal policies have contributed to declining inflation, through the termination of central bank financing of the budget and significant sales of foreign exchange.

The body warned Ethiopia last year that excessive monetary growth was the principal cause of its rising inflation, while private bank lending restrictions and a tricky business environment would slow economic growth.

High coffee earnings in the past few years have also boosted the economy of Africa’s biggest coffee producer, as have rising gold, oil seed and livestock exports.

Ethiopia is the world’s fourth-largest sesame exporter after China, India and Myanmar.