Ethiopia's Economic Forecast Promising

The economic outlook in Ethiopia for 2001 and 2002 is promising with real gross domestic products (GDP) growth forecast at around 6.5 percent in 2001 and 7 percent in 2002, said a report of the Economist Intelligence Unit on Tuesday.

The report said although the restoration of external lending and gradual reductions in military spending will also contribute to the growth, the government's estimate of real GDP growth of 10 percent in 2001 is overly optimistic.

Agricultural production is expected to increase, with grain production expected to reach 12.8 million tons in 2001, the report said.

However, coffee production in the country is forecast to decline in the 2001-2002 financial year because of anticipated dry spells in coffee growing regions and the longer-lasting effects of coffee berry disease on local coffee tree, it added.

Meanwhile, the report also predicted that inflationary pressures in Ethiopia over the next two years will ease slightly due to lower food prices.

The Ethiopian currency birr is expected to depreciate further in 2001 and 2002, from one U.S. dollar to 8.35 birr in 2001 and around 9.5 in 2002, owing to low international prices for exports of coffee, hides and skins, the report added.

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