Ethiopia has an impressive record of human development improvements and output growth—averaging about 10 percent in the last decade—underpinned by public investment and productivity gains. However, over the last three years, droughts and weak international prices for agricultural commodities dampened growth and opened an external imbalance. Ethiopia is now experiencing a growth recovery after the 2015/16 drought. The authorities’ determined actions to control public borrowing and imports has reduced the current account deficit; and foreign direct investment is rising fast. However, exports remained stagnant in 2016/17 and drought conditions lingered in some areas.
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