Eritrea Economy Profile 2009

Economy - overview

Since independence from Ethiopia in 1993, Eritrea has faced the economic problems of a small, desperately poor country, accentuated by the recent implementation of restrictive economic policies. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice (PFDJ). Like the economies of many African nations, the economy is largely based on subsistence agriculture, with 80% of the population involved in farming and herding. The Ethiopian-Eritrea war in 1998-2000 severely hurt Eritrea's economy. GDP growth fell to zero in 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive into northern Eritrea caused some $600 million in property damage and loss, including losses of $225 million in livestock and 55,000 homes. The attack prevented planting of crops in Eritrea's most productive region, causing food production to drop by 62%. Despite the fighting, Eritrea developed its transportation infrastructure, asphalting new roads, improving its ports, and repairing war-damaged roads and bridges. Since the war's conclusion, the government has maintained a firm grip on the economy, expanding the use of the military and party-owned businesses to complete Eritrea's development agenda. The government strictly controls the use of foreign currency by limiting access and availability. Few private enterprises remain in Eritrea. Eritrea's economy depends heavily on taxes paid by members of the diaspora. Erratic rainfall and the delayed demobilization of agriculturalists from the military continue to interfere with agricultural production, and Eritrea's recent harvests have been unable to meet the food needs of the country. The Government continues to place its hope for additional revenue on the development of several international mining projects. Despite difficulties for international companies in working with the Eritrean Government, a Canadian mining company signed a contract with the Government in 2007 and plans to begin mineral extraction in 2010. Eritrea also opened a free trade zone at the port of Massawa in 2008. Eritrea's economic future depends upon its ability to master social problems such as illiteracy, unemployment, and low skills, and more importantly, on the government's willingness to support a true market economy.

GDP (purchasing power parity)

$3.945 billion (2008 est.)
$3.867 billion (2007 est.)
$3.829 billion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate)

$1.479 billion (2008 est.)

GDP - real growth rate

2% (2008 est.)
1% (2007 est.)
-1% (2006 est.)

GDP - per capita (PPP)

$700 (2008 est.)
$700 (2007 est.)
$700 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector

agriculture: 17.4%
industry: 23.2%
services: 59.4% (2008 est.)

Population below poverty line

50% (2004 est.)

Labor force

NA

Labor force - by occupation

agriculture: 80%
industry and services: 20% (2004 est.)

Unemployment rate

NA%

Household income or consumption by percentage share

lowest 10%: NA%
highest 10%: NA%

Investment (gross fixed)

20.2% of GDP (2008 est.)

Budget

revenues: $234.6 million
expenditures: $523.3 million (2008 est.)

Inflation rate (consumer prices)

18% (2008 est.)
17% (2007 est.)

Stock of money

$NA (31 December 2008)
$749.1 million (31 December 2007)

Stock of quasi money

$NA (31 December 2008)
$932.9 million (31 December 2007)

Stock of domestic credit

$NA (31 December 2008)
$1.711 billion (31 December 2007)

Industries

food processing, beverages, clothing and textiles, light manufacturing, salt, cement

Industrial production growth rate

2% (2008 est.)

Electricity - production

253 million kWh (2006 est.)

Electricity - production by source

fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (2001)

Electricity - consumption

216 million kWh (2006 est.)

Electricity - exports

0 kWh (2007 est.)

Electricity - imports

0 kWh (2007 est.)

Oil - production

0 bbl/day (2007 est.)

Oil - consumption

5,186 bbl/day (2006 est.)

Oil - imports

4,924 bbl/day (2005)

Oil - exports

54.74 bbl/day (2005)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2007 est.)

Natural gas - consumption

0 cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

0 cu m (2007 est.)

Natural gas - proved reserves

0 cu m (1 January 2006 est.)

Current Account Balance

-$229 million (2008 est.)
-$203 million (2007 est.)

Agriculture - products

sorghum, lentils, vegetables, corn, cotton, tobacco, sisal; livestock, goats; fish

Exports

$13 million (2008 est.)
$12 million (2007 est.)

Exports - commodities

livestock, sorghum, textiles, food, small manufactures

Exports - partners

India 31.7%, Italy 18.6%, Kenya 11.9%, China 11.5%, France 5.4% (2008)

Imports

$601 million (2008 est.)
$580 million (2007 est.)

Imports - commodities

machinery, petroleum products, food, manufactured goods

Imports - partners

Italy 16.9%, UAE 15.7%, China 13%, India 9.4%, US 6.7%, Germany 6%, Turkey 5% (2008)

Reserves of foreign exchange and gold

$24 million (31 December 2008 est.)
$34 million (31 December 2007 est.)

Debt - external

$311 million (2000 est.)

Economic aid - recipient

$355.2 million (2005)

Currency (code)

ERN

Currency (code)

nakfa (ERN)

Exchange rates

nakfa (ERN) per US dollar - 15.38 (2008 est.), 15.5 (2007), 15.4 (2006), 14.5 (2005), 13.788 (2004)
note: the official exchange rate is 15 nakfa to the dollar

Fiscal year

calendar year