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Ethiopian Economy May Double over Next 9 Years – AfDB’s Ncube

Ethiopia’s economy may double in size over the next nine years, African Development Bank Chief Economist Mthuli Ncube said in a speech in Johannesburg today. Ncube predicted that Ethiopia’s economy mig

ht expand 10 percent this year and East Africa would expand by about 6.7 percent in 2011 and 2012.

Ncube’s prediction stands in contrast to the International Monetary Fund’s (IMF) prediction, made on 30 May 2011, of lower economic growth at 6 percent for Ethiopia in the 2011/12 fiscal year.

IMF estimates the 2010/11 growth at 7.5 percent compared to an official estimate of 11.4 percent. Though exports and fiscal revenues are doing well, inflation reached 30 percent in April and was cited as the major macroeconomic challenge. IMF blames restrictions on private bank lending, high inflation, and a more difficult business environment as the causes of the expected low economic growth. It approved of the decision to lift most price controls and recommended reducing the costs of trade.

IMF had said that the economy would fall from 7.5 percent this year to 6 percent in the 2011/2012 fiscal year and that the country's monetary policy was pushing up inflation which, combined with restrictions on bank lending, would in turn bring about a slower economic growth.

On the other hand, Hailemariam Desalegn, deputy prime minister of Ethiopia, had said on 8 June 2011 that Ethiopian economic growth might exceed 10 percent contrary to the IMF's May 30 prediction.

Source: Bloomberg, IMF press release