The World Bank cut its forecast for Ethiopia’s economic growth in the 2020 fiscal year to 6.3%, well below the government’s projection.
The National Bank of Ethiopia has forecast that gross domestic product growth would accelerate to 10.8% for the fiscal year ending in July, up from a 9% pace in fiscal 2019 as the government implements a blueprint expected to boost investment.
Economic reforms by Prime Minister Abiy Ahmed’s government have renewed interest from investors and attracted billions of dollars in financial support. However, the country is struggling with foreign currency shortages, shrinking exports and the highest inflation in half a decade.
“Growth is expected to slow due to tighter fiscal and monetary policy stances aimed at containing inflation,” the World Bank said in a report released Wednesday in Washington. The annual inflation rate in the Horn of Africa nation was 19.5% in December.
The lender reduced its fiscal 2020 growth forecast for Ethiopia by 1.9 percentage points from the prior estimate in June. Growth could increase slightly to 6.4% in fiscal 2021 and 7.1% in 2022, according to the World Bank.