• Maintain domestic and external balance through sustained domestic
revenue increases, increased export earnings, and improved valueaddition in agriculture.
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To achieve these objectives, a number of far reaching monetary, fiscal, exchange
rate, trade, industrial, and private sector development policy measures are in
various stages of implementation. Policy effectiveness can easily be inferred
from recent macroeconomic achievements. The box below summarises the
results of consistent and prudent macroeconomic management in Ethiopia.
However, due to a lack of data the CRM could not determine the extent to which
there was adequate local capacity to do proper economic modelling.
Commendable Practice 3: Ethiopia’s Macroeconomic Management
Macroeconomic policy-making is generally sound, as reflected in the following indicators:
• Strong economic growth rates averaging 11. 8 percent between 2003/04 to
2008/09;
• Successful control of inflation – sharp drop in the 12 months to June 2009 to 3
percent, aided by falling food price levels;
• Growth in savings and investment - private investment as a share of in GDP rose
from 10.1 percent in 2004/05 to 18.2 percent in 2006/07; Gross domestic savings
grew rapidly from 1 percent of GDP in 2002/03 to 5.6 percent in 2006/07;
• Reduction in fiscal deficits from 16.4 percent of GDP in 2002/03 to 8.6 percent in
2007/08.
Economic growth and income
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During the fiscal year 2007/08, real GDP in Ethiopia grew by 11.6 percent. This
was the fifth consecutive year for high rates of growth (11.7 percent in 2003/04,
12.6 percent in 2004/05, 11.5 percent in 2005/06, and 11.5 percent in 2006/07),
placing Ethiopia amongst the top performing economies in sub-Saharan Africa.
Growth rates over the period 1991-2004 averaged 4.5 percent, while over the
period 1974 - 1991, the economy grew, on average, by about 2 percent.
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Similarly, gross national income (GNI) per capita which averaged US$ 104.3
over the period 1996-2004, had reached a level of US$ 220 in 2007, reflecting
the upswing in economic growth performance. Furthermore, the rate of per capita
GDP growth of 3.3 percent on average, for the period 1997-2007 (8.0 percent in
2006, 8.7 percent in 2007 and 8.8 percent in 2008), has been much higher than the
country’s rate of population growth of 2.2 percent, over the same period. Figure 1
shows Ethiopia’s real GDP growth and per capita GDP in recent years.
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