A preliminary Assessment for Ethiopia by CEPHEUS RESEARCH AND ANALYTICS
Key takeaways from the research:
The impacts are concentrated in the hospitality industry, exporters (flowers/textiles) certain manufactures and banks.
Based on the research the growth will be 2.5 percentage points lower next year (falling to 5 percent) and net balance payments impacts close to $1.5 billion.
While the government has acted quite quickly and decisively with a range of public health measures, interventions on the economic policy front are still in their early stages.
The researchers estimated that fiscal resources needed for public relief packages could reach Birr 90bn (2.3% of GDP) and central bank liquidity intervention of around Birr 47bn (1.2% of GDP) may be required.
Hospitality Industry: This sector is facing an almost complete loss of customers. Many hotels have started giving workers mandatory leave (paid and unpaid) on the expectation that this will be temporary, but if conditions persist for many months a large share of those staff may be laid off ( tens of thousands of workers).
Flower exporters: Are threatened by several quarters of near-zero revenue if conditions in Europe the primary market take a long time to recover.
The first half of year exports were $225mn and the fiscal year outlook was for around $450mn in exports; if the last four months of flower exports are near zero, then year total exports will be $150mn.The recent removal of the NBE minimum price set for flowers is not that meaningful since the underlying problem is the collapse in European demand.
Textile Exports: have faced suspension of orders from US, Europ, and Chinese companies. textile exports were $100mn in the first half of the year and a prolonged suspension may thus cost up to $50mn in foregone exports per quarter.
Manufacturers: Especially those dependent on foreign inputs from china (supplies 26 % of Ethiopia's total imports are reporting delays in getting critical inputs. This could reduce or completely stop their operations for several quarters if the Chinese recovery is slow to pick up.
For a more detailed review of the download the analysis using the following link.
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