Ethiopia Opens $3.61 Billion Gap on Kenya’s Economy

May 25, 2017 Semonegna Business 0

The IMF’s latest data indicates that Ethiopia’s gross domestic product (GDP) hit $72.52 billion last year from $64.68 billion in 2015 and is expected to touch $78.3 billion this year.

By Neville Otuki (Business Daily)

Ethiopia has opened a Sh371.8 billion ($3.61 billion) gap on Kenya’s economy fueled by a decade of double-digit GDP growth, cementing its position as Eastern Africa’s emerging power house.

The International Monetary Fund’s (IMF) latest data indicates that Ethiopia’s annual economic output, also known as the gross domestic product (GDP), hit $72.52 billion (Sh7.4 trillion) last year from $64.68 billion in 2015 and is expected to touch $78.3 billion this year.

Kenya, which lost the Eastern Africa economic leader position to Ethiopia in 2015, recorded a GDP of Sh7 trillion ($68.91 billion) last year compared to $63.62 billion in 2015 and is expected to touch $75 billion this year.

Ethiopia’s strong performance exceeded projections for last year by about $3 billion, the IMF economic outlook 2017 report shows.

The Horn of Africa nation has now effectively firmed its grip as the region’s economic giant, but trails Kenya in terms of per capita income — which measures average wealth of citizens.

Ethiopia’s growth is largely fueled by public-led spending on infrastructure and a robust domestic demand, the IMF report says.

While acknowledging Ethiopia’s headline growth figures, chief executive of the Institute of Economic Affairs Kwame Owino said that Addis, which is starting from a relatively low development base, is playing catch-up to make up for years of under-investment.

It remains to be seen whether Ethiopia will sustain the growth momentum, Mr Owino said.

“With a population twice Kenya’s, Ethiopia’s larger economy is expected just by looking at the labor force and huge domestic market that have served to attract investors,” he said.

The IMF report shows Tanzania is the region’s third-largest economy with a GDP size of $47.1 billion last year, while Uganda posted an output of $26.1 billion.