BMI View: Strengthening investment into manufacturing and infrastructure will boost Ethiopia's economicactivity in 2017 and 2018 and translate into gradually rising incomes. However, the ongoing drought insouth-eastern part of the country will push food inflation higher in the near-term thus limiting householdspending in other retail sub-sectors. Over the medium term, the country's overall consumer profile willremain weak due to still very low income levels and elevated inflation.
We hold a positive view on Ethiopia's economic outlook, on the back of strengthening investment inmanufacturing and infrastructure. While protracted droughts in the south-eastern parts of the country isnegatively affecting food production, GDP growth will remain robust, forecast at 6.2% in 2017 and 6.5% in2018. Positive economic backdrop will translate into gradually rising household incomes and strengtheningprivate consumption, which we forecast to increase by 6.0% over 2017, accelerating from 2.0% in 2016.
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