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12
April

Economic Environment

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Ethiopia's economy is based on agriculture, which in 2008/09, Contributed about 43 percent of the gross domestic  product (GOP), 86 percent of foreign currency earnings, and 85% of rural employment. Generally, the overall  economic growth of   the   country   has  been   highly   associa ted   with   the   performance  of   the agriculture sector.

Coffee is critical to  the  Ethiopian  economy. Other  important export  products include oil seeds, pulses, leather and leather products, meat  and meat products, fruits and vegetables, live animals, flowers 'chat' and gold.

The industrial  sector,  which mainly  comprises  of small and  medium enterprises accounts for about 13 percent of GOP. Similarly, the service sector comprised of social services, trade, hotels and restaurants. finance, real estate, and  transport and communication, etc. accounts for about 43 percent of GOP.

Real GOP grew by an average of 11 .5 percent per year for the last six consecutive years (2003/04-2008/09). which places Ethiopia among the top  performing economies in Sub-Saharan  Africa.  All sectors contributed to this relatively high economic growth.  Accordingly, agriculture, industry  and  services  grew  by  an annual average of 1 0.8. 10.1 and  13 percents. respectively during  the indicated period. The absolute growth and contributions of the three sectors to the GOP in 2008/09 are shown below.

 

                           Agriculture and allied activties       Industry                     Services

Source:Ministry of Finance and Economic Development. Annual Report 2008/09

At the  end  of  2008/09, the official (marginal)  exchange rate  in the  inter-bank foreign exchange market  was Birr 10.4 to US$ l as compared to Birr 13.43 to US$ l (as of April23,2010) .

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