Eritrea Economy 2008

Economy - overview:
Since independence from Ethiopia in 1993, Eritrea has faced the economic problems of a small, desperately poor country, accentuated by the recent implementation of restrictive economic policies. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice (PFDJ). 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. The government strictly controls the use of foreign currency, limiting access and availability. Few private enterprises remain in Eritrea. Eritrea's economy is heavily dependent on taxes paid by members of the diaspora. Erratic rainfall and the delayed demobilization of agriculturalists from the military continue to interfere with agricultural production, and Eritrea's recent harvests have not been able to meet the food needs of the country. The government continues to place its hope for additional revenue on the development of several international mining projects, but companies' difficulties working with the Eritrean government have thus far impeded progress. Eritrea's economic future depends upon its ability to master social problems such as illiteracy, unemployment, and low skills, and more importantly, on the government's willingness to support a true market economy.

GDP (purchasing power parity):
$4.751 billion (2006 est.)

GDP (official exchange rate):
$1.372 billion (2007 est.)

GDP - real growth rate:
2% (2007 est.)

GDP - per capita (PPP):
$1,000 (2007 est.)

GDP - composition by sector:
agriculture: 21.7%
industry: 22.6%
services: 55.7% (2007 est.)

Labor force:
NA

Labor force - by occupation:
agriculture: 80%
industry and services: 20% (2004 est.)

Unemployment rate:
NA%

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

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

Inflation rate (consumer prices):
15.5% (2007 est.)

Investment (gross fixed):
21% of GDP (2007 est.)

Budget:
revenues: $232.7 million
expenditures: $467.6 million (2007 est.)

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

Industries:
food processing, beverages, clothing and textiles, light manufacturing, salt, cement

Industrial production growth rate:
2% (2007 est.)

Electricity - production:
274 million kWh (2005)

Electricity - consumption:
228 million kWh (2005)

Electricity - exports:
0 kWh (2005)

Electricity - imports:
0 kWh (2005)

Oil - production:
0 bbl/day (2005 est.)

Oil - consumption:
5,000 bbl/day (2005 est.)

Oil - exports:
54.59 bbl/day (2004)

Oil - imports:
4,924 bbl/day (2004)

Oil - proved reserves:
0 bbl (1 January 2006 est.)

natural gas - production:
0 cu m (2005 est.)

natural gas - consumption:
0 cu m (2005 est.)

natural gas - exports:
0 cu m (2005 est.)

natural gas - imports:
0 cu m (2005)

natural gas - proved reserves:
0 cu m (1 January 2006 est.)

Current account balance:
-$343.1 million (2007 est.)

Exports:
$16.82 million f.o.b. (2007 est.)

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

Exports - partners:
Italy 26.7%, France 13.8%, Australia 8.2%, Sudan 7.9%, US 7.8%, China 6.2%, Saudi Arabia 5.5%, Jordan 5.2% (2006)

Imports:
$565.9 million f.o.b. (2007 est.)

Imports - partners:
Italy 15.8%, Saudi Arabia 15.7%, China 15.6%, Netherlands 6.7%, Turkey 6.2%, Germany 5.3% (2006)

Economic aid - recipient:
$355.2 million (2005)

Reserves of foreign exchange and gold:
$22.08 million (31 December 2007 est.)

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

Currency (code):
nakfa (ERN)

Exchange rates:
nakfa (ERN) per US dollar - 15.5 (2007), 15.4 (2006), 14.5 (2005), 13.788 (2004), 13.878 (2003)
note: the official exchange rate is 15 nakfa to the dollar