This section aims at providing investors with an overview of the overall structure of Ethiopia’s economy and its growth performance. Government growth statistics are presented according to the Ethiopian calendar; the calendar years spread from September to August, and with a lag of 7 to 8 years with the Gregorian calendar (September 11, 2015 corresponds to the first day of the Ethiopian calendar year 2008). The fiscal year lasts from July to June.
Ethiopia’s development strategy is considered a major success on the African continent. The authorities have managed to put the country of 90 million people on a path of strong growth while displaying outstanding performance in the fight against poverty and the improvement of social welfare.
Over the past decade, strong economic growth in Ethiopia helped to reduce poverty headcount significantly, from 38.7% in 2005 to 29.67% in 2011, while low levels of inequality have been maintained with the Gini coefficient remaining stable at 0.30. Growth in the agriculture sector has been an important driver of this trend, together with favorable weather conditions, improving terms of trade for rural producers and strong improvements in access to basic services and rural safety nets.
In recent years, the Ethiopian economy continued its strong expansion with real GDP growing at a pace of c. 10%, mainly driven by the services sector from the supply side and public investment from the demand side. At the same time, inflation has remained in single digits for the last couple of years on account of tighter monetary policy and lower international commodity prices.
Going forward, the fall in global oil prices is expected to have a positive economic impact on Ethiopia, the country being a net importer of fuel. The growth effect is expected to be positive in part because declining oil prices increase disposable real income and support stronger domestic consumption. Hence, GDP growth should remain high in the medium term. Rising working age population will continue to support potential GDP growth. High growth and lower oil prices will also drive further reductions in poverty. Estimates Of GDP and Other Macroeconomic Indicators_Ethiopia 2007 (2014_15 EFY). Since 2010, the government's strategy has been based on the implementation of successive five-year plans (Growth and Transformation Plans, or "GTP") aimed at achieving the status of middle income country by 2025.
Ethiopia is currently implementing its second Growth and Transformation Plan (GTP II), which spans the periods, 2015/16 to 2019/20.