Eritrea Economy - 2005

Economy - overview:
Since independence from Ethiopia on 24 May 1993, Eritrea has faced the economic problems of a small, desperately poor country. Like the economies of many African nations, the economy is largely based on subsistence agriculture, with 80% of the population involved in farming and herding. The Ethiopian-Eritrea war in 1998-2000 severely hurt Eritrea's economy. GDP growth fell to zero in 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive into northern Eritrea caused some $600 million in property damage and loss, including losses of $225 million in livestock and 55,000 homes. The attack prevented planting of crops in Eritrea's most productive region, causing food production to drop by 62%. Even during the war, Eritrea developed its transportation infrastructure, asphalting new roads, improving its ports, and repairing war damaged roads and bridges. Since the war ended, the government has maintained a firm grip on the economy, expanding the use of the military and party-owned businesses to complete Eritrea's development agenda. Erratic rainfall and the delayed demobilization of agriculturalists from the military kept cereal production well below normal, holding down growth in 2002-04. Eritrea's economic future depends upon its ability to master social problems such as illiteracy, unemployment, and low skills, and to open its economy to private enterprise so the diaspora's money and expertise can foster economic growth.

GDP:
purchasing power parity - $4.154 billion (2004 est.)

GDP - real growth rate:
2.5% (2004 est.)

GDP - per capita:
purchasing power parity - $900 (2004 est.)

GDP - composition by sector:
agriculture: 12.4%
industry: 25.9%
services: 61.7% (2004 est.)

Labor force:
NA

Labor force - by occupation:
agriculture 80%, industry and services 20%

Unemployment rate:
NA (2003 est.)

Population below poverty line:
50% (2004 est.)

Household income or consumption by percentage share:
lowest 10%: NA
highest 10%: NA

Inflation rate (consumer prices):
10% (2004 est.)

Investment (gross fixed):
26.3% of GDP (2002)

Budget:
revenues: $235.2 million
expenditures: $373.2 million, including capital expenditures of NA (2004 est.)

Agriculture - products:
sorghum, lentils, vegetables, corn, cotton, tobacco, coffee, sisal; livestock, goats; fish

Industries:
food processing, beverages, clothing and textiles, salt, cement, commercial ship repair

Industrial production growth rate:
NA

Electricity - production:
246.6 million kWh (2002)

Electricity - consumption:
229.4 million kWh (2002)

Electricity - exports:
0 kWh (2002)

Electricity - imports:
0 kWh (2002)

Oil - production:
0 bbl/day (2001 est.)

Oil - consumption:
6,000 bbl/day (2001 est.)

Oil - exports:
NA

Oil - imports:
NA

Current account balance:
$-144.9 million (2004 est.)

Exports:
$64.44 million f.o.b. (2004 est.)

Exports - commodities:
livestock, sorghum, textiles, food, small manufactures (2000)

Exports - partners:
Malaysia 54.7%, Italy 8.8%, France 3.7% (2004)

Imports:
$622 million f.o.b. (2004 est.)

Imports - commodities:
machinery, petroleum products, food, manufactured goods (2000)

Imports - partners:
US 32.3%, Italy 15.5%, Turkey 5.5%, UK 4.6%, Russia 4.4%, Italy 6.4% (2004)

Reserves of foreign exchange and gold:
$30.87 million (2004 est.)

Debt - external:
$311 million (2000 est.)

Economic aid - recipient:
$77 million (1999)

Currency (code):
nakfa (ERN)

Exchange rates:
nakfa (ERN) per US dollar - 13.788 (2004), 13.878 (2003), 13.958 (2002), 11.31 (2001), 9.625 (2000)