Boston, MA -- (SBWIRE) -- 06/11/2013 -- Core Views

Despite the sudden death of long-standing Prime Minister Meles Zenawi in August 2012, the smooth handover of power and his successor's endorsement of the status quo should see stability and broad policy continuity preserved through to elections in 2015.

We expect the Ethiopian economy to remain on a robust growth trajectory over the next few years - BMI forecasts real GDP growth of 6.7% in 2013 and 6.1% in 2014 - underpinned by strong investment in the energy and transport sectors and an improvement in conditions for the Ethiopian consumer.

Having reached a peak of 40.6% year-on-year (y-o-y) in August 2011, headline inflation in Ethiopia has - as we predicted - fallen steadily over the last 18 months and we expect price pressures to continue to ease in 2013 on the back of a relatively favourable outlook for food production and a moderation in global oil prices.

View Full Report Details and Table of Contents

We expect Ethiopia to sustain a persistent, but stable fiscal shortfall over the medium term, with the deficit hovering between 2.5% and 3.5% of GDP. The deficit will be sustained primarily by high levels of government spending on infrastructure and poverty reduction under the Growth and Transformation Plan.

Major Forecast Changes

Recently published data by the National Bank of Ethiopia in FY2011/2012 (October-September) suggest that the country's fiscal shortfall widened slightly more than we had anticipated, reaching an estimated 3.2% of GDP. In 2012/13, BMI forecasts the deficit to remain in similar shaping at 3.2% of GDP (compared with our previous projections of 2.6%).

Key Risks To Outlook

Despite the relatively smooth handover of power following Meles Zenawi's death, political risks will remain heightened. Increasing social tensions raise the prospect of an uptick in domestic unrest, while a behind-close-doors power struggle among the political elite could threaten policy-making.

As is the case for many African nations, Ethiopia is highly susceptible to the volatility of commodity markets, particularly coffee, which can either adversely or favourably affect export revenues and headline growth.

About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Country Reports research reports at Fast Market Research

You may also be interested in these related reports:

- Argentina Business Forecast Report Q2 2013
- Brazil Business Forecast Report Q3 2013
- Romania Business Forecast Report Q2 2013
- Czech Republic Business Forecast Report Q2 2013
- Germany Business Forecast Report Q3 2013
- Hungary Business Forecast Report Q3 2013
- Colombia Business Forecast Report Q2 2013
- Slovenia Business Forecast Report Q2 2013
- Philippines Business Forecast Report Q3 2013
- Russia Business Forecast Report Q2 2013