Ethiopia: Political instability and illiquidity challenge return to high growth

​Ethiopia has achieved one of the highest long-term growth rates in Africa in the last decade. Average GDP growth reached a dizzying 10.2%. Sustaining high-speed expansion will be a challenge due to disappointing agricultural productivity, political turmoil, and liquidity challenges. In 2016 agriculture, which accounts for 38.8% of GDP, has been hit by a historic drought, which also took a toll on export growth. 

EH expects growth in 2016 at 7.0%, 5.5% in 2017, and 6.0% in 2018. Though growth remains strong, it is clearly diverging from its high long-term trend (see chart 1). This could challenge Ethiopia’s ambition to become a lower middle-income country within the next 10 years. ​