World Bank2014-01-302014-01-302013-06https://hdl.handle.net/10986/16740Over the past decade, Ethiopia has achieved high economic growth, averaging 10.7 percent per year. In 2012, Ethiopia was the 12th fastest growing economy in the World. If the country can continue its historically impressive growth performance, it could potentially reach middle income status by 2025. This, in turn, may require an adjustment in economic policy to phase in the private sector as an additional engine of growth. Moreover, Ethiopia needs to make progress on two related important fronts: enhancing domestic savings, and, resolving the bottlenecks of the trade logistics system. This Second Ethiopia economic update, prepared in collaboration with the Government of Ethiopia, offers policy guidance on how to move forward. Chapter one discusses Ethiopia's growth strategy, which emphasizes a strong expansion of public investment. This model has delivered impressive results, although the underlying macro policy mix highlights important challenges going forward suggesting that an adjustment to strategy may be warranted. One policy challenge relates to raising sufficient domestic savings to finance one of the highest public investment rates in the world, as discussed in chapter two. Another challenge relates to strengthening the competitiveness of the economy, to boost the lagging export performance, and attract foreign direct investment. Ethiopia's trade logistics system is a key constraint in this regard, as highlighted in chapter three.en-USCC BY 3.0 IGOAGGREGATE DEMANDAGRICULTUREBALANCE OF PAYMENTSBANK ACCOUNTBANK ASSETSBANK BRANCHBANK BRANCH NETWORKSBANK BRANCHESBANK DEBTBANK FINANCINGBANKING SECTORBANKING SECTOR ASSETSBANKING SYSTEMBANKING SYSTEMSBASE YEARBIDBLACK MARKETBONDBOND INVESTMENTSBONDSBRANCH NETWORKSBROAD MONEYBUDGETINGCAPITAL FORMATIONCAPITAL OUTLAYSCENTRAL BANKCENTRAL BANKSCERTIFICATES OF DEPOSITCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL TERMSCOMMODITY PRICESCOMPETITIVE BIDDINGCOMPETITIVE TENDERSCOMPETITIVENESSCONSUMER GOODSCREDIT GROWTHCREDITORSCURRENCYCURRENCY APPRECIATIONCURRENCY DEPRECIATIONCURRENCY DEVALUATIONSCURRENT ACCOUNTCURRENT ACCOUNT DEFICITDEBTDEBT BURDENDEBT MANAGEMENTDEBT RATIOSDEBT RELIEFDEBT SERVICEDEPOSITSDEVELOPMENT ASSISTANCEDEVELOPMENT BANKDISBURSEMENTDISBURSEMENTSDISPOSABLE INCOMEDOMESTIC BANKINGDOMESTIC CREDITDOMESTIC LIQUIDITYECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC DEVELOPMENTSECONOMIC GROWTHECONOMIC OUTLOOKECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC SECTORSEXCESS LIQUIDITYEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURESEXPORT COMPETITIVENESSEXPORT GROWTHEXPORT PERFORMANCEEXTERNAL BORROWINGEXTERNAL DEBTFINANCESFINANCIAL DEVELOPMENTFINANCIAL INTERMEDIATIONFINANCIAL LITERACYFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFISCAL POLICYFIXED CAPITALFIXED INVESTMENTFORECASTSFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN EXCHANGE RESERVESFREE TRADEGDPGDP DEFLATORGDP PER CAPITAGENERALIZED SYSTEM OF PREFERENCESGINI COEFFICIENTGOVERNMENT BONDSGOVERNMENT INVESTMENTGOVERNMENT POLICIESGOVERNMENT REVENUEGOVERNMENT REVENUESGOVERNMENT SAVINGGOVERNMENT SAVINGSGROSS DOMESTIC PRODUCTGROSS NATIONAL SAVINGSGROWTH OPPORTUNITYGROWTH RATEHOUSEHOLD SAVINGSHUMAN DEVELOPMENTIMPORT COSTSINCOMEINCOME GROWTHINCOME LEVELINFLATIONINFLATION RATEINFLATION RATESINFLATIONARY PRESSUREINFORMAL SAVINGSINFRASTRUCTURE INVESTMENTSINSTRUMENTINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINVENTORIESINVESTMENT ACTIVITIESINVESTMENT ACTIVITYINVESTMENT DECISIONSINVESTMENT FINANCINGINVESTMENT PROCEEDSINVESTMENT PROJECTSINVESTMENT PROPOSALSINVESTMENT RATEINVESTMENT RATESINVESTMENT STRATEGYKEY CHALLENGELABOR MARKETLIQUIDITYLIQUIDITY POSITIONLOANLOAN CONTRACTLOAN TERMLOANABLE FUNDSLOCAL CURRENCYM2MACROECONOMIC ENVIRONMENTMACROECONOMIC POLICIESMACROECONOMIC STABILITYMARKET PRICEMATURITYMICRO FINANCEMICRO FINANCE INSTITUTIONSMICRO FINANCINGMICRO-FINANCEMICRO-FINANCE INSTITUTIONSMONETARY AUTHORITIESMONETARY FUNDMONETARY POLICYMONEY MULTIPLIERMONEY SUPPLYNATIONAL BANKNATIONAL INCOMENATIONAL SAVINGNET EXPORTSNOMINAL INTEREST RATENON-PERFORMING LOANNON-PERFORMING LOANSOPEN MARKETOPEN MARKET OPERATIONSOUTPUT PER CAPITAPENSIONPENSION SYSTEMPER CAPITA INCOMEPRIVATE BANKSPRIVATE INVESTMENTPRIVATE SECTOR CREDITPUBLIC BANKSPUBLIC DEBTPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC SAVINGPUBLIC SAVINGSPUBLIC SECTOR DEBTQUANTITY THEORY OF MONEYREAL EXCHANGE RATEREAL GDPREAL INTERESTREAL INTEREST RATEREAL INTEREST RATESRECURRENT EXPENDITURESREMITTANCESRESERVERESERVE REQUIREMENTRESERVE REQUIREMENTSRESERVESRETURNSAVINGSSAVINGS RATESAVINGS RATESSAVINGS SCHEMESSTRUCTURAL CHANGESUPPLY CHAINT-BILLSTAXTAX COLLECTIONTAX RATESTAX REVENUESTAXATIONTERMS OF CREDITTOTAL OUTPUTTRADE BALANCETRADE DEFICITTRADINGTRANSPARENCYTREASURYTREASURY BILLTREASURY BILL RATEUNEMPLOYMENTUNEMPLOYMENT RATEVALUE ADDEDVELOCITY OF MONEYWAREHOUSESWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/16740