The newly released International Monetary Fund (IMF) World Economic Outlook narrows down from its earlier forecast on the global economic growth. Despite the dip in projection, Ethiopia’s projection remains unchanged with projections showing higher growth estimation when compared to the global and regional forecasts.
The outlook was published on October 11, in line with the joint annual meeting of the IMF and the World Bank with the countries finance ministers and central bank leaders indicating that the economic growth has faced several challenges.
The forecast that was given in April has met revision and reduction, as per insights from the outlook. In a similar publication on April 2022, during the joint spring meeting, the IMF forecasted that the global economic growth will slow down to 3.6 percent in 2022 and 2023.
However, the latest estimation dropped the rate slightly for 2022 and more for 2023.
“Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023,” it reads, adding, “This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic and reflects significant slowdowns for the largest economies.”
It added that about a third of the world economy faces two consecutive quarters of negative growth. According to the outlook, global tightening in financing conditions could trigger widespread emerging market debt distress.
“Interest rates are expected to rise as central banks tighten policy, exerting pressure on emerging market and developing economies,” the outlook underlined.
The global economic growth is also estimated to be hurdled by challenges including the aftermath of COVID 19, inflation and conflict between Russia and Ukraine, which also imposes limitation for small economies.
“Scarring effects are expected to be much larger in emerging markets and developing economies than in advanced economies reflecting more limited policy support and generally slower vaccination with output expected to remain below the pre-pandemic trend throughout the forecast horizon,” the outlook added.
The report indicated that the economic growth for low income countries will be 4.5 percent and 5.3 percent for 2022 and 2023 respectively that has slight reduction similar to the global forecast. The April IMF forecast was 4.8 percent and 5.6 percent for low income countries economic growth.
However, according to the latest IMF document the low income countries economic growth forecast for 2022 reduced compared with April one whilst the Ethiopian estimation is similar from the preceding outlook.
IMF estimated that the Ethiopian economy will expand by 3.8 percent in 2022, which is one of the highest rates in similar economies. While the forecast for the coming year has been estimated to be 5.3 percent that was projected to stand 5.7 percent in April’s forecast.
For low income countries such as DR Congo is expected to attain highest economic growth with 6.1 percent and 6.7 percent for 2022 and 2023 respectively followed by Kenya of 5.3 percent for 2022 and 5.1 percent for 2023. Tanzania and Uganda are the other countries that are expected to register relatively better economic growths in 2022 and 2023.
The latest IMF estimation for DR Congo, Kenya, Tanzania and Uganda has seen reduction when compared with the April forecast for this year’s economic growth.
Sub-Saharan Africa: Living on the Edge
Sub-Saharan Africa’s economic activity is expected to slow significantly in 2022 and remain relatively modest in 2023. A downturn in advanced economies and emerging markets, tighter financial conditions, and volatile commodity prices, have undermined last year’s gains. Looking ahead, the outlook remains highly uncertain. Consequently, countries in the region are living on the edge, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa launched on Friday October 14.
“Late last year, sub-Saharan Africa appeared to be on a strong recovery path out of a long pandemic. Unfortunately, this progress has been abruptly interrupted by turmoil in global markets, placing further pressures on policymakers in the region,” stressed Abebe Aemro Selassie, Director of the IMF’s African Department.
The region is expected to grow by 3.6 percent in 2022, down from 4.7 percent in 2021, due to muted investment and the overall worsening of its balance of trade. Non-resource-intensive countries, which enjoy a more diverse economic structure, will continue to be among the region’s more dynamic and resilient economies, growing by 4.6 percent in 2022, compared to 3.3 percent in oil exporters and 3.1 percent in other resource-intensive countries.
Following worldwide trends, inflation has increased faster and more persistently than previously anticipated, reflecting mounting prices for essential food and energy items, which comprise about 50 percent of the region’s consumption basket. And while the recent pickup in inflation is less striking relative to historical averages for sub-Saharan Africa, the cost-of-living squeeze has pushed millions of people into acute food insecurity and could weigh on economic growth and undermine social and political stability.
The most recent turmoil is just the latest in a series of shocks over the past few years, all of which have taken a toll on the region’s policy space. Public debt has reached about 60 percent of GDP, leaving the region with debt levels last seen in the early 2000s. In this regard, the composition of debt has shifted towards higher-cost private sources, increasing debt service costs and rollover risks. In fact, 19 of the region’s 35 low-income countries are now in debt distress or at high risk of distress.
Global growth to slow from 6% to 3.2%
ECA breaks ground on the Africa Hall renovation project
The United Nations Economic Commission for Africa (ECA) organized its monthly Press Briefing on “Africa Hall and Pan-Africanism: Past, Present, and Future” on Monday 10 October with Antonio Baio, Project Manager of the Africa Hall, ECA and Getachew Kassa, supervisor of the Africa Hall Project at the ECA. The focus of the briefing was to present the renovation project of the Africa Hall which will modernize and ensure the building complies with international standards.
Supervisor of the Africa Hall Project, ECA, Getachew Kassa, outlined the historical significance of the Africa Hall, which was inaugurated in 1961 hosting several important meetings in the history of Pan-Africanism, including the liberation of Africa from colonialism. The Hall was conceived and donated by the Emperor of Ethiopia Haile Selassie to serve as headquarters of ECA, with a vision of attracting the UN to Africa and uniting African Nations.
It is also the birthplace of the Organization of African Unity (OAU), which is now the African Union (AU), and whose founding Charter was signed in the Hall in 1963.
“The Hall stands as a living symbol of African history, the culture, noble aspirations of African people for peace and unity on the continent which is free of colonialism,” explained Getachew Kassa.
Antonio Biao, Project Manager of the Africa Hall at the ECA underlined the significance of the renovation project, which will modernize and upgrade the Hall’s structural and technological facilities. The renovation will strengthen its resistance to earthquakes and includes the development of new security buildings as well as improving the building’s accessibility, to make the Africa Hall modern, safe, and functional. The renovation project will also see the creation of a visitors’ center and a permanent exhibition space.
In 2015, the UN General Assembly approved the budget of $57 million for the project. The renovation project was funded by the 193 member states. Antoni Biao explained the renovations will, “respect the original design principles including Afewerk Tekle’s stained-glass triptych – ‘The Total Liberation of Africa’ – and main features with special attention paid to art works and signs, whilst upholding the best international standards and practice.” Baio also called for voluntary contributions, in particular from African Member States since the renovation project is important for the preservation of Africa’s history and culture.
In closing, discussions with the journalists focused on the importance of protecting the integrity of the Africa Hall from a historical perspective by involving experts and the desire to link all the African States donations – cultural artworks, official documents of historical events which took place in the Africa Hall – to the history of Africa Hall.
Since its conception more than half a century ago, the Africa Hall stands as a living symbol of Africa’s history, culture, and noble aspirations of African People for peace and unity on a continent free of Colonialism. It also represents one of the most prominent examples of African architectural heritage.
The Africa Hall ground-breaking ceremony took place on 14 October 2022 with the Hall being expected to be re-opened mid-2024.
Socio economic improvements are pivotal, sensitizes President Sahle-Work
The government underlines that socio economic improvements will be realized as huge expectations are set for the current budget year.
During the opening session in parliament on Monday October 10, President Sahle-Work Zewde on her opening remark highlighted the priorities that the government will undertake in the budget year which began in July.
Most of the areas that she keenly touched upon were in relation to social and economic developments that will be carried out during the course of the year.
The President pointed out that despite having challenges such as natural disaster, conflict, effect of COVID 19, the previous year’s economy was strong, as it recorded positive growth. She pinned the increment of export earnings, good initiatives in agriculture, achievements on mega projects and FDI as positive achievement for the year.
According to the President, despite attainment of several economic successes, the previous year’s inflation still presented macroeconomic challenges, “The government has emplaced several economic measures to contain the inflation from further engulfment.”
She emphasized that the government must work to overcome the inflation that is highly affecting low income citizens.
Sahle-Work said that for the year, the government will give priority to peaceful resolutions in the northern conflict, improve good governance, support the initiative for national dialogue and strengthen the diplomatic sphere.
Regarding the economic sector the government will strongly work on the initiative to develop tourist destinations and improve the sector, the President sensitized.
Improving the tax revenue and effective resource utilization, accomplishing ongoing projects as per schedule, and expanding the public private partnership have been stated as a priority for the year. Containing the inflation, accelerating agricultural initiatives have also been outlined as key areas that government will put much needed attention on.
Ethiopia’s irrigation systems, mini grids receive boost through USD 20 million injection
The Distributed Renewable Energy – Agriculture Modalities (DREAM) launches a 20 million dollar worth project to kick start nine renewable energy mini-grids and irrigation systems across Ethiopia.
The project was officially launched on October 11, 2022 at Hyatt Regency hotel with the presence of government officials, representatives of World Bank, Africa Development Bank, Global Energy Alliance for People and Planet (GEAPP), and the European Investment Bank as part of the initiative to build the first solar mini-grid powered large scale irrigation systems in Africa, providing famers with reliable, affordable, and sustainable irrigation.
Partners involved in the project include Ethiopia’s Ministry of Water and Energy, Ministry of Irrigation and Lowlands (MILLs), Ministry of Agriculture (MoA), Agriculture Transformation Institute (ATI), Global Energy Alliance for People and Planet (GEAPP), The World Bank, European Investment Bank and African Development Bank – Sustainable Energy Fund for Africa.
Over the life of the program which is said to stay for three years, 200 mini-grids will provide new or improved access to electricity to over 290,000 people, create or improve more than 60,000 jobs, while displacing up to 200,000 tons of greenhouse gas emissions by 2030. The project which adopts renewal energy using solar mini-grids is expected to help increase modern irrigation practices.
Agriculture is the heart of Ethiopia’s economy, accounting for 32% of GDP and 70% of the labor market. However just 5% of land is irrigated and crop yield from small farms are below regional averages.
The majority of rural Ethiopians depend on farming for their livelihoods, and climate change is making farming in the country, and across Africa, more unpredictable. DREAM will support agricultural communities and provide opportunities for farmers and local businesses to grow and thrive.
The DREAM project will provide reliable and affordable solar mini-grid power and irrigation systems that will pump water more efficiently than diesel pumps, increasing crop yields, incomes, and food security. The initiative expects farmer incomes to increase from 50% – 300% depending on the site.
Over the next ten years, GEAPP partners will support the Government of Ethiopia to connect up to20 million people with reliable and renewable electricity via economic development projects across rural Ethiopia that facilitate investments into productive use energy.
