Sunday, June 23, 2024
BusinessCOVID-19 slashes growth forecast to 6%

COVID-19 slashes growth forecast to 6%

The Government of Ethiopia, due to the effects COVID-19 has on the economy, has reduced its Gross Domestic Product (GDP) growth forecast for this fiscal to six percent from the previous projection of nine percent, The Reporter has learnt.

The pandemic has largely impacted the service sector, followed by industry, with manufacturing and construction subsectors taking pole position. In her interview with The Reporter, Fitsum Assefa (PhD), Commissioner of National Planning and Development Commission with a ministerial portfolio, said a serious macroeconomic impact of the pandemic is about to be observed in the GDP growth, employment conditions and the like. The growth projections are somewhat similar to the likes of IMF, Fitsum said. Those projections have indicated growth to slow down by three to four percentage points.

According to the commissioner, based on a survey conducted in 2018, there are 7.5 million wage earners and some three million people engaged in informal small businesses in urban areas that are going to face the grim realities of COVID-19. By the estimates of the government, 705,000 jobs are at risk and the majority of the three million informally self-employed individuals are also on the brink of losing their livelihoods.

Fitsum said that in order to minimize the impacts, the government is considering additional stimulus packages for the most affected businesses. Previously, a 15 billion birr stimulus package for the private sector was announced and five billion birr has been allocated for medical emergencies and other social supports. In addition, with the aim of aiding the informal economy where as many as 40 percent of the workforce is assumed to make a living from, the government has considered providing a humanitarian assistance and USD 1.7 billion has been requested from development partners to address the gap created. The Commissioner said more than half of the money has already been secured and is on its way to reach the coffers of the government.

The funding will help reach additional 15 million beneficiaries composed of small business owners, now out of their jobs, semi-skilled workers who will likely be laid off, destitute and street children and others are also included in this number. The total number of people who will require emergency relief, safety net cash transfers, food for work reaches up to 30 million people in Ethiopia.

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While the pandemic has negative impacts, there are also opportunities prevailing for Ethiopia, the commissioner alluded. Textile firms despite being affected now are shifting to mask production for exports to neighboring markets. Industrial parks are receiving large quantities of orders, Fitsum added. The growing demand for coffee in the international market, while many producing countries have found it difficult to supply their coffees, Ethiopia is considering utilizing these opportunities as prices are rising.

Despite the service and the industry sectors experiencing difficulties, the agriculture sector is considered to remain “absolutely intact” for this year, and next harvesting seasons. So far, a produce of 329.3 million quintals of major crops has been harvested.

According to the Commissioner, the growing number of COVID-19 cases is projected to reach its peak in the coming June. Ethiopia will remain in partial lockdown and is highly unlikely that the government will opt for a total lockdown measures.

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