Ethiopia Economic Update, No. 8 : Ensuring Resilient Recovery from COVID-19
COVID-19 has severely affected Ethiopia, weakening its economic performance. Ethiopia has experienced a collapse in external demand since April 2020 due to COVID-19. While merchandise exports, excluding gold, increased by 5.8 percent overall in FY2...
| Main Authors: | , , , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/672121619537898959/Eighth-Ethiopia-Economic-Update-Ensuring-Resilient-Recovery-from-COVID-19 http://hdl.handle.net/10986/35550 |
| Summary: | COVID-19 has severely affected Ethiopia,
weakening its economic performance. Ethiopia has experienced
a collapse in external demand since April 2020 due to
COVID-19. While merchandise exports, excluding gold,
increased by 5.8 percent overall in FY20, they declined by
4.1 percent during July-December 2020 (year-on-year).
Exports of garments, textiles, and fruits and vegetables
have been particularly hit since the onset of the pandemic.
Both exports and imports of services, dominated by air
transport, recorded negative growth in FY20. Remittances
dropped by 10 percent in FY20, although they have rebounded
during the first half of FY21. Merchandise imports, which
were already on decline prior to COVID-19, dropped by 8
percent in FY20, contributing to the narrowing of the
current account balance, estimated at about 4 percent of
GDP. Meanwhile, foreign direct investment has been severely
hit, with inflows declining by 20 percent in FY20,
contributing to weakening reserve levels. Despite the severe
impacts, Ethiopia grew at 6.1 percent in FY20, as the impact
of the COVID-19 pandemic took place largely in the final
quarter of the fiscal year. Phone survey data suggests that
both firm revenue and household income are significantly
depressed, which points to weakening domestic demand. The
adverse impact of the COVID-19 pandemic on economic activity
is expected to continue in FY21, prior to experiencing a
rebound in FY22 and beyond. Further action is needed to
ensure a resilient economic recovery. The Government of
Ethiopia is to be commended for having kept advancing its
Homegrown Economic Reform Agenda despite COVID-19.
Implementing some complementary reforms will be key to
ensuring a resilient recovery in the new COVID-19 normal. |
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