Intensifying Ongoing Development Initiatives the Sole Option to Overcome Global Shocks



Answering to the queries forwarded to him by the members of parliament at the 11th Regular Session of the HPR on the 28th of March 2023, Prime Minister Abiy Ahmed expounded the economic situations of the country over the last six months of the current Ethiopian fiscal year.

Before dealing with the economic situations of the country, he briefly dwelt upon the global economic crisis that took place over the last 100 years, namely the Great Depression of 1929-1939, the 1929 Black Market Crash, and the 2000 Dotcom Bubble Crash that prevailed from March 2000 to October 2002 and the 2008 financial crisis which led to the crash on real estate investments and some giant global banks. 

He added that the world is in the threshold of the 5th level of global economic downturn with three basic indicators including the skyrocketing of debt and defaulting, drastic reduction on asset prices and continuous reduction in global income. He noted that massive downsizing of labor force specially in the IT area, crash of major western banks, hyperinflation up to 100% for instance in Argentina and huge expenditure on debt repayment. 

The Ethiopian economy is on a growth trajectory. However, the premier cautioned that as the Ethiopia’s economy is linked to the world economic situation, it will be invariably affected both by the negative and positive trends in the state of world economy.

As it stands now, it is clear that the current economic situation in the world does not bring about favorable conditions for countries like Ethiopia, calling for devising home grown strategies that will enable the country to escape from global economic down turn.

The Prime Minister quoted the current IMF World Outlook and indicated that the Russia-Ukraine War and the second round of COVID-19 have affected the economic development of 184 countries out of which 110 have faced 10% increase in the level of their inflation. He said all the above factors directly affect the pace of the economic development of Ethiopia as the country is linked to the dwindling rate of global economic growth from 6.1% in 2021 to 3.4% in 2022 and 2.9 in 2023% respectively. This according to the writer of this article is expected to be worse over several years.

According to the premier, the only way out of this impending global and national economic disaster is to work much harder and improve the state of the national economy.

The Prime minister elaborated that the major economic hurdles of the current economic development of the country include shortfalls in infrastructure, the alarming imbalance between supply and demand. Inflation that has been ever growing over the last two decades seriously affecting the livelihood of low income earning citizens, the disproportion between supply and demand and lack of linkage between produces and consumers, insufficient national income, war over the last two years, wide spread climate change induced drought, and rural-urban migration. 

Besides, rapid increases in the population of the country and the negative effects of world economic system have their own bearings on the economic challenges of the country. 

Ethiopia spends the lion’s share of its annual budget for poverty reduction and pro-poor projects. However, subsidies for fuel and fertilizer significantly consume the portions of the national budget.

As the pace setter of the Ethiopian economy agriculture plays an important role in the national development of the country. 

A new chapter of history, where Ethiopia used to import 17 million quintals of wheat every year, earmarking more than 700 million USD to meet citizens basic bread consumption, has been closed. Ethiopia has commenced exporting wheat. This vision of wheat export has been attained through Prime Minister Abiy's arduous effort and determination in transforming Ethiopia from being a traditional wheat recipient to wheat supplier to foreign markets.

In terms of tourism development, the premier announced that the 3rd flagship ‘Dine For Generation’ initiative, will be launched at Geralta, in Tigray, Hayk, in Amhara, Jimma, Oromia, as well as Arbaminch, in SNNP, and in Afar and Somali regions. Two other private investments will also be launched in Beninshan-Gul Gumuz and in South West Region.

All told, Ethiopia needs to intensify its development and economic initiatives. This according to the premier is the only option to escape from the effects the global economic downturn.  




Ethiopian News Agency