Ethiopia’s economy is expected to overtake Kenya’s this year, buoyed by massive government spending on infrastructure that has kept the Horn of Africa nation on the list of the world’s fastest-growing economies in the past 10 years.
The International Monetary Fund’s latest statistical estimates indicate that Ethiopia’s gross domestic product is forecast to grow from $61.62 billion in 2015 to $69.21 billion this year, narrowly beating Kenya’s output, which is expected to rise from $63.39 billion to $69.17 billion over the same period.
“Ethiopia has experienced double-digit economic growth, averaging 10.8 percent since 2005, which has mainly been underpinned by public sector-led development,” the African Development Bank, the OECD Development Centre and the United Nations Development Programme say in the latest African Economic Outlook report.
Kenya’s GDP of $14.1 billion in 2000 was 71.6 percent larger than Ethiopia’s $8.23 billion in the same year but the Horn of Africa nation has closed the economic gap in the last five years of robust growth.
The IMF’s GDP estimates are based on current market prices using exchange rates prevailing between July 22 and Aug. 19.
Kenya is viewed as relatively more democratic than Ethiopia, which remains under authoritarian rule often marked by crackdowns on the press and its own citizens, such as the Oromo.
More importantly, Kenya runs a comparatively more open economy, unlike Ethiopia, which has closed most sectors of its economy to foreign investors.
The IMF’s GDP forecasts are based on several assumptions, such as that established policies of national authorities will be maintained and that the average price of oil will be $42.96 a barrel in 2016 and $50.64 a barrel in 2017 and will remain unchanged in real terms over the medium term.
“The estimates and projections are based on statistical information available through Sept. 16, 2016,” the IMF said.
While Kenya faces the prospects of being overtaken by Ethiopia in absolute economic size, it is expected to maintain a huge lead ahead of other neighboring countries in the region, including Uganda and Tanzania.