Foreign trade figures of Ethiopia

Foreign Trade in Figures

Ethiopia is not fully open to international trade, with a foreign trade-to-GDP ratio of 24% (World Bank, latest data available). It is a member of the IGAD and the COMESA (but has not joined the free trade zone) and has long been in the process of joining the WTO. As part of this process, the government is restructuring the customs tariffs. In order to rationalize investment opportunities, it has introduced lower duties on raw materials and semi-finished products. Ethiopia recently signed the African Continental Free Trade Agreement and created special economic zones offering tax incentives and customs duties exemptions to investors. The country mainly exports vanilla, unwrought nickel, coffee, oilseeds, vegetables, cut flowers, pulses, and meat. The main imported products are petroleum oils, rice, textiles (mostly for re-exports), medicines, wheat, palm oil, vehicles and fertilizers.

According to data by Comtrade, in 2021 Ethiopia’s main customers were Somalia (11.8%), the United States (10.8%), Germany (8%), and the Netherlands (7.5%); whereas its main suppliers were China (26.4%), India (15.7%), the United States (7.6%), Turkey (5%), and Malaysia (4.1%). The peace agreements signed with Eritrea should favour economic relations between the two countries, and the water-sharing agreement concluded with Egypt and Sudan over the Nile River dam will ease the tensions between these neighbouring countries and promote economic relations. However, due to the conflict in the Tigray region and alleged human rights violations, the U.S. removed Ethiopia from the African Growth and Opportunity Act trade program, which is expected to negatively impact trade.
 
Ethiopia's trade balance is structurally in deficit, and this trend will continue due to the country's investment-led economy, which strongly encourages imports. Trade balance also partially depends on weather phenomena, which sometimes forces Ethiopia, a large agricultural producer, to import grains during droughts. In 2021, imports of goods amounted to USD 15.9 billion, whereas exports stood at USD 3.9 billion. In the same year, Ethiopia spent USD 6.6 billion in imports of services while export generated USD 5.5 billion. According to the World Bank, the country’s trade balance was negative by 9.1% of GDP (from 9.8% one year earlier). Figures from the Ministry of Trade and Regional Integration show that during the 2021/2022 fiscal year, Ethiopia exported goods worth USD 4.1 billion: of these, the agricultural sector had the highest share (72%), followed by the mining sector (14%) and the industry sector (12%).