Foreign trade figures of Ethiopia

Foreign Trade in Figures

Ethiopia is relatively open to international trade, with a foreign trade-to-GDP ratio of 24% (World Bank, 2020). It is a member of the IGAD and the COMESA (but has not joined the free trade zone), and since March 2003, has 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 also 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 coffee, oilseeds, vegetables, cut flowers, pulses, meat and manufacturing products. The main imported products are petroleum oils, medicines, wheat, palm oil, vehicles and fertilizers.

Ethiopia’s main customers are Somalia, the United States, the Netherlands, Saudi Arabia, the United Arab Emirates, Germany and Djibouti. Its main suppliers are China, India, Turkey, the United States, the United Arab Emirates, Kuwait and Japan. 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. The Djibouti-Addis Ababa railway line is expected to increase Ethiopia’s exports of manufactured goods. However, due to the conflict in the Tigray region and alleged human rights violations, the US removed Ethiopia from the African Growth and Opportunity Act trade program, which will negatively impact trade in 2022.

Ethiopia's trade balance is historically 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 phenomenon, which sometimes forces Ethiopia, a large agricultural producer, to import grains during droughts. In 2020, imports of goods amounted to USD 13.12 billion, whereas exports of goods amounted to USD 3.26 billion. Ethiopia spent USD 5.38 billion in imports of services while export of services generated USD 4.32 billion. Imports of goods and services increased by 15.6% compared to 2019 while exports decreased by 0.5%. In 2020, due to the COVID-19 pandemic, exports suffered from the lack of tourism and the fall in activity of Ethiopian Airlines. Coffee production was also reduced due to security problems and population displacement (Coface).