Meles Zenawi has declared GDP growth forecast 8.55%

Meles Zenawi has declared GDP growth forecast 8.55% ADDIS ABABA 7/04/2006

Prime Minister Meles Zenawi has declared GDP growth forecast in Ethiopia points to 8.55 percent, which exceeds the average necessary to achieve the Millennium Development Goals (MDGs).

In a report he presented on Tuesday to the House of Peoples’ Representatives, which marks the conclusion of the House’s annual closing session, Prime Minister Meles said Ethiopia’s crusade against poverty and the struggle to ensure rapid growth were successfully carried out during the 1998 Ethiopian fiscal year.

The 8.55 percent GDP growth forecast has been reached on the basis of data collected in the past 11 months, according to the Prime Minister whose report deals with the highlights of the Government’s activities during the year for the realization of its democratization, peace building and development objective.

While an average GDP growth of 6 and 7 percent is necessary to achieve the MDG, the Government has on this basis adopted the target of 7 – 10 percent growth, Meles said. "…Viewed from this perspective, the first year of implementation of the five-year plan adopted by The House has indeed been successful."

" As our economic development activity has been export-led, the year under review saw rapid growth in our export," according to Meles who, citing data collected for the past 11 months, airs a no-less-than 20 percent rate of growth in the country’s exports, whose forecast for the year is also around 20 percent.

" The fact that the rate of growth of export is more than twice faster that the overall growth of the economy shows that our economy is progressing on the right track as outlined in our development strategy," Meles said.

Indicating what he said was a significant gap in the growth rate of import, which stands at 25 percent, compared to that of exports, Meles, however, described it as "healthy" in view of the greater share of the imports maving been made for critical inputs to the country’s economic development in the form of capital and raw materials.

Of the country’s total import during the past 11 months, 29 percent accounted for consumer goods while the share of capital goods was 33 percent and that of raw materials and semi processed raw materials was 20.6 percent. The remaining was mainly fuel.

Government revenue collection during the past 11 months amounted to well over 14.14 billion Birr, registering a growth rate of 25.6 percent compared to the amount of regular revenue collected during the previous year, Prime Minister Meles said in his report. The performance in regular revenue collection shows an 86.8 percent rate of plan implementation.

He said, Government budget for the same period was more than 20.7 billion Birr, of which 80.5 percent of the targeted amount has been utilized.

Although these figures demonstrate an accelerated and positive growth, Meles said the inflation rate which was above what has been planned was seen as a negative development. The actual rate of inflation stands at 12.4 percent as against the less than 10 percent anticipated.

Coupled with price hikes of imports, particularly fuel, demand increase of commodities as stimulated by the economic growth triggered the inflation rate. In the case of fuel, Meles, however, said, "…The Government has provided support subsidy in order to reduce consequent inflationary pressure."

Demand increase might appear to be a problem in the short run, which Meles said, would be a source of sustainable growth in the medium and long term. As a case in point, Meles said, huge investments got underway with respect to sugar and cement production, commodities whose demand goes beyond the country’s current production capacities.

He said, thus, sugar production is expected to increase five-fold and cement production at least three-fold when the investment projects attain their production phases. "Similarly, the increase in the price of food grains, which appears to be momentarily significant, can be taken as an incentive to the farmers to increase their production and in the process contribute to growth in the agricultural sector."

Conditions have been facilitated to stimulate growth at higher levels than ever in the fields of trade and industry, as investment activities of private entrepreneurs are in progress at levels of extent and magnitude never seen before, Meles indicated.

He expressed his Government’s commitment to achieving success in the on-going tasks of consolidating economic development, peace, democracy and good governance for the benefit of allt he peoples of the country. Prime Minister Meles concluded his report with a call on the entire Ethiopian peoples to rally behind the Government for the realization of these lofty objectives."

(From Ethiopian News Agency)