2018年-世界发展银行全球_Ethiopia_Economic_Update___The_Inescapable_Manufacturing-Services_Nexus_106页_8mb

Ethiopia Economic Update Summary

Core Content

This report provides an analysis of Ethiopia's recent economic developments and outlook, with a special focus on the interlinkages between the manufacturing and services sectors, particularly the role of distribution services in enhancing export competitiveness and structural transformation.

Main Points

1. Recent Economic Developments and Outlook

• GDP Growth: Ethiopia's GDP growth rebounded to 10.9% in FY2017, driven by agricultural recovery after a drought in FY2016.
• Inflation: Inflation remained in single digits during FY2017, averaging 7.1%, but rose to 13.6% in November 2017 due to food inflation. The devaluation of the Birr in October 2017 is expected to have a moderate impact on inflation.
• Fiscal Policy: The federal government pursued a moderately expansionary fiscal policy in FY2017, with a fiscal deficit estimated at 2.9% of GDP. The fiscal deficit is projected to remain below 3% of GDP.
• Trade Balance: Ethiopia's trade balance improved due to a slowdown in imports, not an increase in exports. The export sector remains small, with total goods and services exports not exceeding 10% of GDP.
• External Debt: Ethiopia's external debt risk was downgraded from "moderate" to "high" due to a significant breach of debt burden thresholds. The country faces vulnerabilities from export weaknesses and nonconcessional loan disbursements.
• Economic Prospects: Economic growth is expected to remain stable at around 8% in FY2018 and the medium term. However, the growth model remains vulnerable to terms-of-trade shocks and an overvalued exchange rate.

2. Services and Manufacturing Linkages

• Importance of Services: Services play a crucial role in Ethiopia's economy and exports. They are both directly tradable and serve as intermediate inputs for manufacturing.
• Distribution Services: Distribution services are a key component of value chains in sectors such as dairy, teff, sesame, and textiles. Despite their importance, they remain underdeveloped and heavily regulated.
• Regulatory Environment: Ethiopia's services sector is characterized by high informality, poor access to finance, explicit trade barriers, and limited regulatory capacity. The retail sector is completely closed to foreign participation.
• Structural Transformation: The traditional view of structural transformation focuses on the reallocation of resources between sectors. Modern perspectives emphasize productivity growth within sectors and the role of services in value addition.
• Policy Implications: There is a need for integrated policy approaches that consider both goods and services markets. Services should be treated as equally important as manufacturing in achieving export performance and structural transformation.

Key Recommendations

• Raise Awareness: Increase awareness about the importance of distribution services for both formal and informal sectors.
• Relax Trade Barriers: Remove explicit trade barriers and regulatory obstacles to promote competition and innovation.
• Address Informality: Facilitate the inclusion of smallholders in modern distribution chains and improve access to financial services in the informal sector.
• Improve Infrastructure: Address infrastructure constraints such as roads and ports to support the growth of distribution services.
• Develop Skills: Implement local training programs and apprenticeships to build the necessary talent and know-how for the distribution sector.
• Regulatory Reforms: Develop necessary regulatory frameworks and eliminate disproportionate entry requirements, such as lengthy registration procedures and inadequate zoning regulations.
• Price Controls: Remove price controls to enhance competition and product quality.
• Support Modern Services: Encourage the development of modern services such as communication and business services to diversify exports and increase export earnings.
• Political Economy Analysis: Conduct in-depth political economy analysis to identify feasible reforms that benefit both local stakeholders and global operators.

Conclusion

Distribution services are a critical yet underdeveloped component of Ethiopia's economy. Their potential to enhance export performance and support structural transformation is significant, but requires policy reforms to address regulatory, financial, and infrastructural constraints. Strengthening the distribution sector is an important step towards a more competitive and sustainable economic growth model.