Ethiopia’s economy is expected to grow by 9.5 per cent this fiscal year ending June before accelerating to 10.5 per cent in 2015/16, the World Bank said on Friday, adding inflation will remain in single digits during this period.
The ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) has touted its economic achievements before Sunday’s election, although no one doubts it will sweep to power again, as critics say it stifles any real opposition.
There is just one opposition member of the outgoing parliament.
Lars Christian Moller, the World Bank’s lead economist and program leader for Ethiopia, told Reuters that falling oil prices should help quicken Ethiopia’s growth in 2015/16.
“If lower oil prices are passed on to consumer in the form of lower fuel prices, it gives additional disposable income to consumers,” Moller said in the capital Addis Ababa.
The Ethiopian government has targeted annual growth at about 11 per cent for the past five years.
Moller said the service and agriculture sectors are likely to drive growth, along with the booming construction sector, most visible in the capital where new multi-story office blocks and shopping malls have altered the city’s skyline.
He added growth eased slightly in 2014/15 due to below par rains in the mountainous Horn of Africa nation, which remains one of the world’s poorest countries despite boasting one of the highest growth rates across the globe.
Annual inflation is likely to remain in single digits, in line with the government target, Moller said.
The bank predicted inflation would average 7.2 per cent this fiscal year, rising to 8.2 per cent in the next fiscal year.
After peaking at 64 per cent in 2008, inflation in Ethiopia has eased in the past two years, staying below 10 per cent.
“We basically interpret that as a policy choice,” he said, adding that in the past, monetary policy played a larger role in facilitating growth.
“They have now shifted their priorities so that they have some degree of price stability, so that means monetary policy will be adjusted so that an inflation target can be met.”