Structurally, there are three major players in the Ethiopian economy. These are small scale farmers, private sector and the government. The country's economy is predominantly agrarian which is highly dependent on subsistence agriculture. Hence, the economic performance in general is depends to a significant degree on the weather condition. But most recently promising results have been registered in utilizing irrigation both in small farmer and private farms. The trend of the private sector involvement is increasing from time to time and market orientation trend is strengthening in the small scale farming. The role of government in the direct production is becoming less and less except in some strategic products having enormous influence on the whole economy. The structure of Ethiopian economy expected to continue with the dominance role of agriculture in leading the growth in the next five years. However, in the mean time efforts will be made to enable the manufacturing sector to overtake the leading position in the economy at the end of or after the coming five years, according to the governmentï¿½s 2010/11-2015/16 Growth and Transformation Plan.
Ethiopia has followed market oriented economic policy since 1992. Then in line with this it has adopted Agricultural Development Led Industrialization (ADLI) strategy as the basis for economic growth of country. The main objective of the strategy is to bring about structural transformation, to streamline and reconstruct the manufacturing sector via extensive use of countryï¿½s natural and human resources. The government has recently disclose in its five year Growth and Transformation Plan the intention to put more emphasis on import substituting manufacturing industries than ever before and simultaneously boosting the Countryï¿½s export. ï¿½It is expected that the government would take some measures aimed at setting up policy and legal frameworks in effort to create enabling environment for attracting more investment in this regard.ï¿½
The economy has shown an annual average growth of 11.0% for the last five years (during 2005/06-2009/10) at constant price with continuous two digits growth rates during the stated period. This could put Ethiopia among the fastest growing countries in the world. According to the Growth and Transformation Plan for 2010/11-2014/15, Ethiopian economy forecasted to grow at annual average rate of 11% and 14.9% at base case scenario and at high case scenario respectively. This consecutive and continuous two-digit high growth would transform the Ethiopian economy in to a new trajectory both in terms of magnitude and structure.
Merchandise export of the country had shown continuous and tremendous growth during the past five years since 2005/06. The total value exports of goods increased from 1.0085 billion USD in 20025/06 to 1.9995 billion USD in 2009/10 registering growth of 98.3%. For the last six years inflation remained in one digit level except in the years 2005/06 and 2006/07, 2007/08 and 2008/2009 where the inflation rates for these years were 10.6 % 15.8%, 25.3 % and 36.4% respectively but now for the period of 2009/2010 (July, 2010), the inflation rate was lowered tremendously to 3.6% as a result of administrative and policy measures taken by the Government.
Five years data on major economic indicators are shown in the following table.
Table 1:ï¿½ MAJOR ECONOMIC INDICATORS
GDP at Current Market Priceï¿½ (In Mn. Birr)
GDP per Capital ( in USD)
Gross Private Consumption (%of GDP)
Gross Domestic Fixed Investmentï¿½ (% of GDP)
GDP at 1999/2000 factorï¿½ Cost (In Mn.Birr)
Real GDP Growth Rate (in %)
Agriculture and Allied Activities (%of GDP)
Industrial Sectorï¿½ (%of GDP)
Services Sector (%of GDP)
General Inflation (%)
Export of Goods and Services (Mn.Birr)
Import Of Goods and Services (Mn.Birr)
Trade Balance (Mn.Birr)
Source: National Bank of Ethiopia, 2008/2009 Annual Report.