Addis Ababa, Ethiopia (26 April 2022)
The April 2022 World Economic Outlook report by IMF brings gloomy news for Ethiopia’s economic growth prospect, projecting a growth rate of 3.8% for the remainder of the year.
While this is not below the world’s average estimate of 3.6% (which has also seen a hit), it is a huge blow to Ethiopia when seeing the registered growth in 2021 stood at 6.1%, and that the rate had peaked at an average of 10.9% between 2004-13. The report also estimates inflation to soar and reach 34.5%, which is conceivable considering the rate has gone up to a height of 34.7% in Ethiopia’s CSA report of last month (March 2022).
As economist Alemayehu Geda (Ph.D.) told The Reporter Ethiopia, this rapidly-increasing inflation, combined with global and domestic wars, will aggravate the already weakened state of the economy. The Ukrainian conflict is even now having an impact on the economy, with wheat, metal products, edible oil, fertilizer, and other commodities imported from the two warring countries rising in price.
It is not all bad news, Alemayehu insisted, as African oil producers such as South Sudan and agricultural producers like Ethiopia can exploit and fill the supply gap in the market created by the war. There is also hope to be gleaned from the report, which projects a growth of 5.7% for 2023 that will accelerate to 7% by 2027.
Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term.
War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January.
Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.
To read the full report, visit the IMF website using the link below. https://www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022
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