Ethiopia, with a population of 123,379,924, is ranked 12th in the world, just behind Japan. Located in East Africa, it spans 1,136,239.544 square kilometers, ranking 26th globally, just below Colombia.
Ethiopia’s economic position in 2022 reflects a GDP of $126.78 billion, ranking 59th globally. The country is surpassed by Morocco, whose GDP stands at $130.91 billion. In terms of GDP per capita, Ethiopia ranks 165th with $1027.59. It lags behind Tajikistan, which has a GDP per capita of $1054.19.
Ethiopia’s economy is characterized by a growing population, agricultural sector, and infrastructure development initiatives. The government is focusing on industrialization and attracting foreign investment to drive economic growth and reduce poverty levels.
What are the economic activities of Ethiopia?
- Primary activities: 34.8% of GDP.
- Secondary activities: 21.6% of GDP.
- Tertiary activities: 43.6% of GDP.
Primary Sector of Ethiopia
Ethiopia’s primary sector, predominantly agriculture, thrives due to its diverse climate and abundant natural resources. With 34.20% of land dedicated to agriculture, the country produces a variety of crops like maize, wheat, cereals, sorghum, and animal products such as milk, barley, and more.
Despite contributing 34.8% to the GDP, agriculture remains vital for food security and employment. The sector’s significance lies in the wide array of crops and animal products, sustaining the country’s agricultural economy.
The country’s geological diversity contributes to resource availability, with small reserves of gold, platinum, copper, potash, natural gas, and hydropower. These resources drive the economy through mining, energy production, and export revenue.
Secondary Sector of Ethiopia
What is the secondary sector or what are secondary activities?
The secondary sector encompasses industries that transform raw materials from primary activities into finished products for consumption. In Ethiopia, the main industrial products include food processing, beverages, textiles, leather goods, garments, chemicals, metals processing, and cement production. These products are vital for both domestic consumption and export, contributing significantly to the country’s economy and industrial development.
In 2023, Ethiopia’s total exports were primarily dominated by agricultural products, with manufactures accounting for a minimal percentage. This indicates that the country’s manufacturing sector may not play a significant role in its export economy.
Tertiary sector of Ethiopia
What is the tertiary sector or what are tertiary activities?
The tertiary sector in Ethiopia encompasses a wide range of services that contribute to economic growth and development. This sector includes activities such as healthcare and medical care, education and training, banking and finance, communication and information exchange, media production and distribution, tourism and hospitality, and transportation and logistics. These services play a crucial role in enhancing productivity, improving performance, and meeting the diverse needs of the population in Ethiopia.
Specifically, Ethiopia’s tourism industry, with only 0.0066 annual arrivals per capita and 812,000 tourists annually, plays a relatively modest role in its economy. Despite its rich cultural heritage and natural attractions, the sector’s contribution to GDP and employment remains limited, highlighting the need for strategic development and promotion of tourism.
Another example of tertiary economic activity is the mobile cellular sector, with 69 million subscriptions, supporting technological growth by enhancing communication, fostering innovation, and enabling digital services across various industries.
Military Activities and Economic Sectors of Ethiopia
The military is a key example of how different economic activities work together. In Ethiopia, the primary sector supports the military by providing resources. The secondary sector focuses on manufacturing military equipment. The tertiary sector includes services like logistics and training. The quaternary sector involves research and development for better technology. Lastly, the quinary sector handles high-level decisions and strategies for military operations.
In 2023, Ethiopia’s military expenditure was 1,226.5 million US dollars, which is 0.90% of its GDP. The active military force consists of 138,000 personnel, equating to 1.3 active military members per 1,000 people in the population.
International Trade of Ethiopia
Import Activities of Ethiopia
Import activities play a crucial role in Ethiopia’s economy, with total imports in 2023 reaching $2.32 billion, accounting for 18.32% of the GDP.
Ethiopia’s key import activities include sourcing wheat, refined petroleum, fertilizers, vaccines, and palm oil. The country’s major import partners are China (24%), US (9%), India (8%), UAE (6%), and UK (4%).
Exports Activities of Ethiopia
In 2023, Ethiopia’s total exports reached $10,453,358,837.32, accounting for 8.25% of its GDP. With a low export-to-GDP ratio, the importance of export activities for the country is relatively low.
Ethiopia’s export activities are diverse, with top partners including UAE, US, Germany, Saudi Arabia, and Somalia. Key exports are coffee, gold, garments, cut flowers, and vegetables.
Ethiopia economy challenges in 2024
Ethiopia faces challenges in 2024 with a growing economy, but ongoing poverty and disruptions from COVID-19, locust invasions, and the Tigray crisis. Public investment is increasing, but the country’s large labor force struggles amidst these difficulties.
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