Ethiopia has displaced Ghana to become Africa’s fastest growing economy in 2018. This announcement was revealed from the data released by the International Monetary Fund (IMF) and it shows that Ethiopia has reclaimed a position it held for almost 10 years.
According to the World Economic Outlook released by IMF yesterday, Ghana, the second-biggest economy in West Africa after Nigeria, needs to expand by 6.3 percent this year. This is lower than the 8.9 percent forecast in October last year and is also less than the prediction for Ethiopia, which stood at 8.5 percent.
Last year commodities such as gold and cocoa, which are the main drivers of Ghana’s economy, fell by 8.5 percent and its oil field also started producing in May. Since Ghana started producing oil in 2010, its growth and fall have been tied to oil just like Nigeria.
It is, however, uncertain if Ethiopia will retain this position for a long time due to the current economic issues plaguing the economy. A few days ago, the new prime minister of Ethiopia, Abiy Ahmed, said the foreign exchange shortage currently plaguing the country will last for years. It is no doubt that over the past decade, Ethiopia has recorded average annual economic growth of about 10 percent which is the fastest in Africa. However foreign investors and local businesses have complained about the severe hard currency shortages which is stifling investment and business activities, increasing inflation and slowing down the overall economic activity of the country.
One of the oldest supermarkets in Ethiopia Bambis Supermarket also said it was at the verge of shutting down its operations in the country due to hard currency shortage and administrative hurdle.
Despite these economic issues plaguing the country, there seems to be a rise in the number of investors, including General Electric Co., Johannesburg-based Standard Bank Group and hundreds of Chinese companies that are investing in the country.
According to Bloomberg, IMF increased its forecast for expansion in sub-Saharan Africa to 3.4 percent this year. Africa’s most-populous nation and top crude producer, Nigeria, will grow 2.1 percent, which is the same as IMF’s estimate released in January 22nd update to the outlook, while South Africa, the world’s biggest source of platinum, will expand 1.5 percent, more than the 0.9 percent of the prediction three months ago.