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Ethiopian industry: still banking on China


Tuesday, 12 January 2016

Ethiopian industry: still banking on China

China’s slowing economy and the turmoil on its stock and foreign exchange markets have reverberated around the world and constitute one of the biggest threats to growth in other emerging markets in 2016. But in Ethiopia, one of the many beneficiaries of Chinese trade and investment, officials remain unfazed. Tedros Adhanom Ghebreyesus, Ethiopia’s foreign minister, says he is confident that Chinese investors still consider Ethiopia a “target country” for manufacturing operations overseas, as wages rise across Asia. “I expect even more foreign direct investment flow from China. There is a strong interest to migrate manufacturing to Ethiopia,” Mr Ghebreyesus told the Financial Times. Wages in Ethiopia are about a quarter of those in China’s and half of Vietnam’s. Ethiopia also benefits from duty-free access to the US market for many goods through the US Africa Growth and Opportunity Act. In October, the IMF cut its 2016 growth forecast for Africa to 3.75 per cent on the back of weak commodities prices and China’s falling growth figures. But the IMF’s forecasts for Ethiopia, by contrast, are holding at above 8 per cent through 2015 and into 2016. Across Africa, the relationship with China — which surpassed the US to become the region’s top trade partner in 2009 — has been one of the drivers of an economic boom over the past decade.

Source: Financial Times