Discussant Paper
Comment on “Ethiopia: Sustaining Rapid Growth amidst Global Economic Crisis” Ishac Diwan
This is a very nice article—concise, with clear, rich arguments and welldesigned graphs that speak a thousand words. The punch line is delivered early: Ethiopia is no longer the paragon of autarky that we have gotten used to hearing about. It has been greatly affected by the recent global crisis, both because several of its channels of interaction with the global economy have become powerful over time, and because Ethiopia has faced the crisis with large macroeconomic imbalances. Growth has continued but it remains below potential. The chapter’s main arguments are as follows.
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Precrisis, the economy was overheating, driven by high public investment. Inflation reached 25 percent in 2008 (it peaked at 64 percent in July 2008) and the balance of payments deficit stood at US$5 billion that year. The collapse in the growth of foreign direct investment (FDI) and of private transfers, which were financing the growing precrisis
Ishac Diwan is Country Director, Western Africa Region, World Bank.
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