Tuesday, January 24, 2012

Is Ethiopia's Economy Really Growing?

We have heard many times that Ethiopia's economy under the Revolutionary Democrats and Ethnic Federalists has grown exponentially. It can not be denied that the absolute GDP of Ethiopia, as well as its GDP per capita indeed has grown and is continuing to grow.

Fig.1 Ethiopia Nominal GDP. (2010 Estimate USD 29.717 Bn.)

Fig.2 Ethiopia Nominal GDP per Capita.(2010 Estimate USD 350.)

Although, the GDP per capita reached pre-1991 levels only in the middle of 2007 (see. Fig.2) and that these figures have not been adjusted for inflation (which is currently at staggering levels).

However, Ethiopia does not exist in a vacuum, so what I really want to explore is how Ethiopia is faring relative to other African countries. If Ethiopia is growing, while at the same time the general economic output of the world and Africa in particular is growing, then we have to compare the GDP growth relative to other and especially to African countries, for if the GDP growth is not proportional than to the rest of African countries, can it really be said that Ethiopia is growing? 

To this end, I employed Wolfram Alpha's computational engine to look at Ethiopia's growth relative to other African countries for however much data that they have kept. The method I employed is a simple one of relative nominal GDP. For example, Ethiopia's nominal GDP in 1982 was ~1.25 times that of Kenya's, while in 2008 it was ~0.85 times that of Kenya's, and according to the latest data it is ~0.83 times that of Kenya's. Meaning relative to Kenya, Ethiopia's nominal GDP has actually shrank.

Fig.3 Ethiopia's nominal GDP relative to Kenya. (2010/2011 estimate ~0.83)

I therefore run through a list of the most populous African countries while employing the above method to explore if a trend emerges in Ethiopia's relative GDP growth.

Fig.4 Ethiopia's nominal GDP relative to Nigeria. (2010/2011 estimate ~0.12)

Fig.5 Ethiopia's nominal GDP relative to Egypt. (2010/2011 estimate ~0.13)

Fig.6 Ethiopia's nominal GDP relative to Congo. (2010/2011 estimate ~2.26)

Fig.7 Ethiopia's nominal GDP relative to South Africa. (2010/2011 estimate ~0.07)

Fig.8 Ethiopia's nominal GDP relative to Tanzania. (2010/2011 estimate ~1.33)

Fig.9 Ethiopia's nominal GDP relative to Sudan. (2010/2011 estimate ~0.32)

Fig.10 Ethiopia's nominal GDP relative to Morocco. (2010/2011 estimate ~0.3)

Fig.11 Ethiopia's nominal GDP relative to Algeria. (2010/2011 estimate ~0.15)

Fig.12 Ethiopia's nominal GDP relative to Uganda. (2010/2011 estimate ~1.68)

Fig.13 Ethiopia's nominal GDP relative to Ghana. (2010/2011 estimate ~0.66)

These 12 countries above (including Ethiopia) combined make up about 2/3 of the total Continental African population, or roughly ~668.5 million people.

Out of these 11 countries, the only country that Ethiopia's relative GDP has exceeded that of pre-1990 levels is of the Democratic Republic of Congo's, and to a marginal extent South Africa's (an already highly developed economy).

So while we can say that Ethiopia's absolute GDP has grown, its GDP relative to other African countries has actually shrank and at best what can be said right now is that it has reached an inflection point, or as chart watchers like to say is in a 'basing' pattern.


  1. that is absoultely non-sense. the GDP of Ethiopia is at the top of the fastest growing in Africa, how come the result to be that opposite? I don't believe you poleticians but other sources like world bank. Try another one, as this is what we see it on our eyes here.

    1. This is not about rate of growth of GDP, but nominal GDP of Ethiopia relative to other large countries in Africa.

      In 2011, the nominal GDP of Ethiopia according to the World Bank was 31.709 BN, while that of Kenya's was 33.621 BN, this makes the ratio 31.709/33.621 = 0.94 , however, this ratio (according to data collected by wolfram Alpha) was much bigger pre and early 1990's, reaching almost 1.75 in 1992 and then going on a steep decline for the next 12-16 years, with a mild bounce post 2005 (for obvious reasons). A similar pattern is seen relative to most other Large African countries, except Congo and South Africa.