Since 2004 (Ethiopian Fiscal Year (EFY)1997), Ethiopia has experienced strong and generallybroad-based real economic growth of around 10.6 percent onaverage between then and 2011. Growth over the last nineyears was far beyond the growth rates recorded in aggregateterms for Sub-Saharan Africa (SSA), which on average onlyreached 5.2 percent, less than half of Ethiopia'saverage real gross domestic product (GDP) growth rate duringthat period. Inspired by the East Asian experiences for acomparison of selected indicators and policies of Ethiopiaand China/Korea), growth was induced through a mix offactors including agricultural modernization, thedevelopment of new export sectors, strong global commoditydemand, and government-led development investments. Theinitial double digits growth rates have now manifestedslightly lower but remain at high single-digit levels. Theeconomy is expected to stabilize at around seven to eightpercent in 2012, largely owing to improved performance inthe agriculture sector. GDP growth is likely to stay aroundthat margin up until 2016 (EFY 2008) driven by risingforeign investment and exports (Economist Intelligence Unit2012). High inflation persists, but is on a slightlydecreasing trend. Economic growth brought with it positivetrends in reducing poverty, in both urban and rural areas.Ethiopia follows a strategy of increasing exports tofacilitate growth. This is appropriate given the currentlylimited size of its domestic market and it is consistentwith the development experience of some of the recentlysuccessful countries, particularly in East Asia. Export ofgoods growth is to a good extent driven by volume growthacross a variety of product groups, which indicates thatthis growth is a result of recent efforts to increase anddiversify the export base. Overall export and importdevelopments result in a significantly increased tradedeficit by 43 percent, up from US$5.5 billion in 2010/11 toUS$7.9 billion.
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