Ethiopia’s economic forecast for 2024

Ethiopia's economic forecast for 2024 has been a subject of interest following the International Monetary Fund's projection that 6 out of the top-10 performing economies worldwide in 2024 will be from Sub-Saharan Africa. Ethiopia stands out as the second-fastest-growing economy in Africa with a GDP growth forecast of 6.2 per cent, only trailing Ivory Coast at 6.6 per cent. In a recent interview with CNBC Africa, Zemedeneh Negatu, the Global Chairman at Fairfax Africa Fund, delved into the factors influencing Ethiopia's economic performance. Negatu highlighted the remarkable resilience of the Ethiopian economy, despite facing various challenges such as the impact of COVID-19 and internal conflicts. He emphasized that Ethiopia managed to maintain a strong economic growth rate of around 6.2 percent in 2024, building on the momentum from the previous year. The agricultural sector continues to play a significant role in driving growth, while investments in infrastructure, services, and manufacturing are also contributing positively to the overall economic performance. However, Negatu pointed out that inflation remains a persistent challenge for Ethiopia, with an average rate of 15 percent over the past 15 years. The government has set targets to gradually reduce inflation to more manageable levels by 2025. In terms of debt sustainability, Ethiopia has been actively engaging in debt restructuring and negotiations with bilateral and private creditors. Negatu clarified that Ethiopia's total foreign credit debt stands at approximately $28 billion, with the euro bond accounting for just $1 billion. He emphasized that Ethiopia's ability to service its debt will largely depend on its continued economic growth and an increase in foreign exchange earnings, particularly through exports. Furthermore, Negatu discussed the impact of the depreciating Ethiopian birr against the dollar and highlighted the importance of ongoing economic reforms, including the liberalization of the exchange regime, to alleviate pressure on the currency. He indicated that as the economy strengthens and foreign exchange inflows improve, the birr is expected to stabilize at its optimal level. Overall, despite facing challenges, Ethiopia's economic outlook for 2024 appears promising, fueled by resilience, growth drivers, and a commitment to financial stability and reforms.