College of Business and Economics
BACHELOR OF ECONOMICS: II YEAR-SECTION-5
MACROECONOMICS GROUP ASSIGNMENT
GROUP MEMBERS ID NO
1. Tsegabrhan Teshome UGR/7063/16
2. Workineh Amanu UGR/7981/16
3. Tiruneh Atnafu UGR/9321/16
4. Yosef Gerem UGR/2803/16
5. Wolelaw Adugnaw UGR/1098/16
6. Tolasa Ayele UGR/1756/16
7. Yohannes Adugna UGR/6485/16
8. Yanet Alemsilassie UGR/5271/16
9. Mohammedsiraj Seid UGR/3838/16
10. Daniel Merid UGR/5263/15
Submitted to: PHD Etsubdink Sileshi
Submitted date: Jun-06-2025
1.The Ethiopian economy has undergone some sectoral transformations in the past three
decades. Using the data available in the annual reports of the National Bank, analyze the
trends in the composition of the different sectors of the economy. Address questions like the
share of which sector is increasing/decreasing/constant by decomposing the economy into:
(Do only ONE ) (3 pts)
a. Agriculture, industry and service sector
Sector Fiscal Year
1998/99 1999/00 2000/01 2001/02
(G.C.) (G.C.) (G.C.) (G.C.)
Agriculture(%of GDP) 50.8 49.9 50.9 49.1
Industry(% of GDP) 12.3 12.4 12.1 12.9
Service(% of GDP) 36.9 38.7 38.0 38.6
Sector Fiscal Year
2002/03 2003/04 2004/05 2005/06
(G.C.) (G.C.) (G.C.) (G.C.)
Agriculture(%of GDP) 44.9 47.0 47.4 47.1
Industry(% of GDP) 14.0 14.0 13.6 13.4
Service(% of GDP) 41.7 39.7 39.7 40.4
Sector Fiscal Year
2006/07 2007/08 2008/09
(G.C.) (G.C.) (G.C.)
Agriculture(%of GDP) 46.1 44.6 43.2
Industry(% of GDP) 13.2 13.0 13.0
Service(% of GDP) 41.7 43.5 45.1
Table 1.1: GDP of Agriculture, Industry and service Sector(From 1998/99-2008/09(G.C.))
As we can see from the above table, throughout the years (between the fiscal year of 1998/99-
2008/09(G.C.) ) the Agricultural sector has shown a decrease in it’s percentage of GDP level.
For the Industrial sector it has shown a slight (close to constant) increase in it’s GDP
percentage and last but not least the Service sector has shown a significant increase in it’s level
of GDP percentage.
Agriculture Industry Service
60
50
40
30
20
10
0
2
9
6
3
5
99
00
7
1
/0
/0
/0
/0
/0
/0
/0
/0
/0
/
9/
01
06
07
02
00
04
98
03
08
05
9
20
20
20
20
19
20
20
20
20
20
19
Line graph 1.1: GDP of Agriculture, Industry and service Sector(From 1998/99-2008/09(G.C.))
Sector Fiscal Year
2015/16 2016/17 2017/18 2018/19
(G.C.) (G.C.) (G.C.) (G.C.)
Agriculture(% of GDP) 37.2 36.0 34.5 32.9
Industry(% of GDP) 23.5 25.6 26.7 27.8
Service(% of GDP) 39.3 38.4 38.7 39.3
Sector Fiscal Year
2019/20 2020/21 2021/22 2022/23
(G.C.) (G.C.) (G.C.) (G.C.)
Agriculture(% of GDP) 32.3 32.1 32.0 31.7
Industry(% of GDP) 28.6 28.9 28.5 28.5
Service(% of GDP) 39.1 39.0 39.5 39.8
Table 1.2: GDP of Agriculture, Industry and service Sector(From 2015/16-2022/23(G.C.))
As for this second table, throughout the years (between the fiscal year of 2015/16-2022/23(G.C.) )
the Agricultural sector has shown a decrease in it’s percentage of GDP level. For the Industrial
sector it has shown an increase in it’s GDP percentage and last but not least the Service sector
has shown little to no change(constant) in it’s level of GDP percentage.
Agriculture Industry Service
40
30
20
10
0
20015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 1.2: GDP of Agriculture, Industry and service Sector(From 2015/16-2022/23(G.C.))
2.The Ethiopian economy has made a significant progress after the turn of the millennium. (8
points)
a. Using Real GDP data, graphically show that the Ethiopian economy has been growing
since the early 2000s.(3 point)
Fiscal years
2000/01(G.C.) 2001/02(G.C.) 2002/03(G.C.) 2003/04(G.C.)
GDP per capita 133 123 132.0 151.0
(in USD)
Fiscal years
2004/05(G.C.) 2005/06(G.C.) 2006/07(G.C.) 2007/08(G.C.)
GDP per capita 180.0 217 270 359.0
(in USD)
Table 2.1a: Real GDP per capita in USD(From year 2000/01-2008/09(G.C.))
500
400
300
200
100
0
3
5
4
9
7
6
2
8
1
/0
/0
/0
/0
/0
/0
/0
/0
/0
06
02
00
04
03
01
07
08
05
20
20
20
20
20
20
20
20
20
Line graph 2.1a: Real GDP per capita in USD(From year 2000/01-2008/09(G.C.))
Fiscal years
2015/16(G.C.) 2016/17(G.C.) 2017/18(G.C.) 2018/19(G.C.)
GDP per capita 17,192.4 18,393.9 19,204.9 20,312.7
(in USD)
Fiscal years
2019/20(G.C.) 2020/21(G.C.) 2021/22(G.C.) 2022/23(G.C.)
GDP per capita 21,144.7 21,860.6 22,543.2 23,664.4
(in USD)
Table 2.1b: Real GDP per capita in USD(From year 2015/16-2022/23(G.C.))
25000
20000
15000
10000
5000
0
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 2.1b: Real GDP per capita in USD(From year 2015/16-2022/23(G.C.))
b. Graphically show that fluctuation in economic growth. Determine the years the
economic growth has reached its maximum and minimum in the last two decades? (3
point)
Fiscal years
1998/99(G.C.) 1999/00(G.C.) 2000/01(G.C.) 2001/02(G.C.)
Real GDP(in %) 5.2 5.9 7.4 1.5
Fiscal years
2002/03(G.C.) 2003/04(G.C.) 2004/05(G.C.) 2005/06(G.C.)
Real GDP(in %) -2.1 11.7 12.6 11.5
Fiscal years
2000/01(G.C.) 2001/02(G.C.) 2002/03(G.C.)
Real GDP(in %) 11.8 11.2 9.9
Table 2.2a: Real GDP growth rate in percentage(From year 1998/99-2002/03(G.C.))
15
10
-5 3
5
99
4
00
9
7
6
2
8
1
/0
/0
/0
/0
/0
/0
/0
/0
/0
8/
9/
06
02
00
04
03
01
07
08
05
9
20
20
20
20
19
20
20
20
20
19
20
Line graph 2.2a: Real GDP growth rate in percentage(From year 2000/01-2008/09(G.C.))
As we can see from the above table and line graph, the Real GDP growth rate in the early
years of 2000's was relatively lower and with time it rose from its lowest rate(minimum) -2.1(in
2002/03) to it’s highest(maximum) 12.6(in 2004/05) with some irregularities in-between and
after.
Fiscal years
2015/16(G.C.) 2016/17(G.C.) 2017/18(G.C.) 2018/19(G.C.)
GDP(in %) 8.0 10.1 7.7 9.0
Fiscal years
2019/20(G.C.) 2020/21(G.C.) 2021/22(G.C.) 2022/23(G.C.)
GDP(in %) 6.1 6.3 6.4 7.2
Table 2.2b: Real GDP growth rate in percentage(From year 2000/01-2008/09(G.C.))
12
10
0
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 2.2b: Real GDP growth rate in percentage(From year 2015/16-2022/23(G.C.))
As we can see from the above table and line graph, the Real GDP growth rate in the year of
2015/16 was relatively good but with time in between the years 2015/16 and 2022/23 their were
some irregularities which made the Real GDP to fall but from the 2022/23 it rose from its fall.
c. What kind of growth trend do you see in last decade ? What do you think explain the
trend? (2 point)
Ethiopia's economy trend in the 2015/16–2022/23 period exhibited resilience in the face of
significant challenges. While the country achieved impressive growth in the mid-2010s,
subsequent conflicts and the pandemic led to economic setbacks. However, the recovery in
2023 indicates potential for renewed growth, contingent on sustained peace, effective reforms,
and strategic investments. Addressing structural issues and fostering political stability will be
crucial for Ethiopia to realize its long-term economic aspirations.
3.Using the 20 year data, graphically show and briefly discuss (Do only THREE) (9 pts)
a. The relationship between GDP deflator and general inflation
Fiscal years
1998/99(G.C.) 1999/00(G.C.) 2000/01(G.C.) 2001/02(G.C.)
GDP deflator 0.7 6.9 -5.8 -3.6
General 4.3 5.4 -0.3 -10.6
inflation
Fiscal years
2002/03(G.C.) 2003/04(G.C.) 2004/05(G.C.) 2005/06(G.C.)
GDP deflator 12.8 3.9 9.9 11.6
(% change)
General 10.9 7.3 6.1 10.6
inflation
Fiscal years
2006/07(G.C.) 2007/08(G.C.) 2008/09(G.C.)
GDP deflator 17.2 30.5 24.4
(% change)
General 15.8 25.3 36.4
inflation
Table 3.1a: GDP deflator and inflation rate (From year 1998/99-2008/09(G.C.))
GDP deflator General Inflation
40
30
20
10
-10
-20
3
5
99
4
00
9
7
6
2
8
1
/0
/0
/0
/0
/0
/0
/0
/0
/0
8/
9/
06
02
00
04
03
01
07
08
05
9
20
20
20
20
19
20
20
20
20
19
20
Line graph 3.1a: GDP deflator and inflation rate (From year 1998/99-2008/09(G.C.))
In Ethiopia, the GDP deflator and general inflation are closely related but serve different
purposes in economic analysis. The GDP deflator measures the overall price level of all goods
and services produced domestically, while general inflation (often measured by the Consumer
Price Index, CPI) tracks price changes for a fixed basket of consumer goods.
As we can see from the above table and line graph, the relationship between GDP deflator and
General Inflation seems like directly related. Which means when the GDP inflator increases
the General Inflation also increases and when the GDP inflator decreases the General Inflation
also decreases. This show that the GDP deflator and General Inflation are directly related.
Fiscal years
2015/16(G.C.) 2016/17(G.C.) 2017/18(G.C.) 2018/19(G.C.)
GDP deflator 9.5 6.7 12.5 13.2
General 9.7 7.4 14.60 12.60
inflation
Fiscal years
2019/20(G.C.) 2020/21(G.C.) 2021/22(G.C.) 2022/23(G.C.)
GDP deflator 18.2 21.8 34.7 32.9
General 19.90 20.20 33.80 32.50
inflation
Table 3.1b: GDP deflator and inflation rate (From year 2015/16-2022/23(G.C.))
Series 1 Series 2
35
30
25
20
15
10
0
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 3.1b: GDP deflator and inflation rate (From year 2015/16-2022/23(G.C.))
The relationship between the GDP deflator and general inflation in Ethiopia underscores the
multifaceted nature of inflation. While both indicators have shown similar trends over the past
20 years, their divergence highlights the importance of considering various economic factors,
including monetary policy, exchange rates, and sectoral growth, in understanding inflation
dynamics.
While both indicators reflect price changes, the GDP deflator provides a broader view of
inflation affecting the entire economy, whereas CPI inflation focuses on consumer-level price
changes. Understanding their relationship helps policymakers design effective monetary and
fiscal policies to stabilize inflation.
b. The trends in total revenue, total expenditure and budget deficit
Fiscal years
1998/99(G.C.) 1999/00(G.C.) 2000/01(G.C.) 2001/02(G.C.)
Total Revenue 9,453.1 9,498.0 10,177.0 10,409.0
(excluding
grants)
Total 14,556.7 17,183.6 15,786.4 17,651.0
Expenditure
Budget Deficit -5,103.6 -7,685.6 -5,609.4 -7,242.0
(excluding
grants)
Fiscal years
2002/03(G.C.) 2003/04(G.C.) 2004/05(G.C.) 2005/06(G.C.)
Total Revenue 11,149.0 13,917.0 15,582.0 19,493.0
(excluding
grants)
Total 20,517.0 20,520.0 24,803.0 29,325.0
Expenditure
Budget Deficit -9,368.0 -6,603.0 -9,220.0 -9,832.0
(excluding
grants)
Fiscal years
2006/07(G.C.) 2007/08(G.C.) 2008/09(G.C.)
Total Revenue 21,797.0 29,794.0 40,174.0
(excluding
grants)
Total 35,607.0 46,915.0 54,774.0
Expenditure
Budget Deficit -13,810.0 -17,121.0 -17,600.0
(excluding
grants)
Table 3.2a: Total Revenue, Total Expenditure and Budget Deficit(in Mn. USD) (From year 1998/99-
2008/09(G.C.))
Total Revenue Total Expenditure Budget deficit
60000
40000
20000
-20000
3
9
4
0
9
6
5
2
8
1
7
/0
/0
/0
/0
/0
/9
/0
/0
/0
/0
/0
02
00
06
98
03
01
04
07
08
05
99
20
20
20
19
20
20
20
20
19
20
20
Line graph 3.2a: Total Revenue, Total Expenditure and Budget Deficit(in Mn. USD) (From year
1998/99-2008/09(G.C.))
Ethiopia's fiscal policy reflects rising revenue, high expenditure, and persistent deficits, with
increasing reliance on domestic borrowing. The shift in spending priorities especially the
decline in capital investment raises concerns about long-term economic growth.
As we can see from the above table and line graph, the relationship between Total Revenue,
Total Expenditure and Budget Deficit is that when the Total Expenditure Increases the Budget
deficit also increase, also the Total Revenue would decrease. And also when the Total
Expenditure Decrease the Budget Deficit also decreases, also the Total Revenue would
increase.
Fiscal years
2015/16(G.C.) 2016/17(G.C.) 2017/18(G.C.) 2018/19(G.C.)
Total Revenue 231,805.2 257,737.2 269,648.2 311,317.4
(excluding
grants)
Total 280,892.8 329,658.1 354,205.3 413,105.7
Expenditure
Budget Deficit -49,087.6 -71,920.9 -84,557.1 -101,788.3
(excluding
grants)
Fiscal years
2019/20(G.C.) 2020/21(G.C.) 2021/22(G.C.) 2022/23(G.C.)
Total Revenue 354,312.8 444,582.6 540,060.5 685,459.1
(excluding
grants)
Total 488,243.2 599,006.7 779,099.0 938,771.6
Expenditure
Budget Deficit -133,930 -154,424 -239,038.5 -253,312.4
(excluding
grants)
Table 3.2b: Total Revenue, Total Expenditure and Budget Deficit(in Mn. USD) From year 2015/16-
2022/23(G.C.))
Total Revenue Total Expenditure Budget Deficit
1000000
800000
600000
400000
200000
-200000
-400000
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 3.2b: Total Revenue, Total Expenditure and Budget Deficit(in Mn. USD) From year 2015/16-
2022/23(G.C.))
Ethiopia's fiscal policy over the past 20 years has been characterized by increasing revenue and
expenditure, leading to persistent budget deficits. The government's focus on infrastructure
and development projects has driven expenditure growth, while revenue enhancements have
been made through tax reforms and improved collection mechanisms. Managing the budget
deficit remains a challenge, necessitating balanced fiscal strategies and effective financing
mechanisms.
While revenue as a percentage of GDP has shown modest increases, expenditure has been
rising, leading to persistent budget deficits. Recent improvements in revenue growth and fiscal
consolidation efforts have contributed to a narrowing of the deficit in 2023. Continued focus
on efficient public spending and sustainable financing will be crucial for maintaining fiscal
stability.
c. The trends in export, import and trade balance
Fiscal years
1998/99(G.C.) 1999/00(G.C.) 2000/01(G.C.) 2001/02(G.C.)
Export of Goods 913.9 984 979.1 982.7
and Services
Import of Goods 1,873.8 1,959.8 1,936.4 2,073.1
and Services
Trade Balance -959.9 -975.8 -957.3 -1,090.4
Fiscal years
2002/03(G.C.) 2003/04(G.C.) 2004/05(G.C.) 2005/06(G.C.)
Export of Goods 1,139.6 1,519.4 1,870.49 2,156.89
and Services
Import of Goods 2,346.7 3,267.9 4,352.72 5,431.77
and Services
Trade Balance -1,207.1 -1,748.5 -2482.2 -3,274.9
Fiscal years
2006/07(G.C.) 2007/08(G.C.) 2008/09(G.C.)
Export of Goods 2,545.4 3,128 3,399.2
and Services
Import of Goods 6,332.7 8,313.1 9,292.5
and Services
Trade Balance -3,787.3 -5,185.1 -5,892.8
Table 3.3a: Export, Import and Trade balance(in Mn. USD) From year 1998/99-2008/09(G.C.))
Series 1 Series 2 Series 3
10000
5000
-5000
-10000
3
9
4
0
9
6
5
2
8
1
7
/0
/0
/0
/0
/0
/9
/0
/0
/0
/0
/0
02
00
06
98
03
01
04
07
08
05
99
20
20
20
19
20
20
20
20
19
20
20
Line graph 3.3a: Export, Import and Trade balance(in Mn. USD) (From year 1998/99-2008/09(G.C.))
Ethiopia's trade dynamics reflect a growing economy with increasing demand for imports,
particularly in infrastructure and industrial sectors. The persistent trade deficit underscores the
need for strategies to boost export competitiveness and reduce reliance on imports. Continued
investment in export-oriented sectors and diversification of trade partners will be crucial for
achieving a more balanced trade position in the future.
As we can see from the above table and line graph, the relationship between Export, Import
and Trade balance is that when an Import increases the Trade balance decreases, and when an
Import decreases the Trade balance increases. And also when the Export increases the Trade
balance increases, and also when the Export Decreases the Trade balance decreases. This
implies that the Export and Trade balance are directly related but the Import and Trade
balance are indirectly related.
Fiscal years
2015/16(G.C.) 2016/17(G.C.) 2017/18(G.C.) 2018/19(G.C.)
Export of Goods 6,077.3 6,257.2 7,095.9 7,694.9
and Services
Import of Goods 20,552.1 19,714 19,707.4 20,704.8
and Services
Trade Balance -14,474.7 -13,456.9 -12,611.4 -13,009.9
Fiscal years
2019/20(G.C.) 2020/21(G.C.) 2021/22(G.C.) 2022/23(G.C.)
Export of Goods 7,715.7 8,498.9 10,457.7 10,855.8
and Services
Import of Goods 18,828.3 19,177.0 23,845.0 23,430.0
and Services
Trade Balance -11,112.6 -10,678.0 -13,387.3 -12,574.2
Table 3.3b: Export, Import and Trade balance(in Mn. USD) From year 2015/16-2022/23(G.C.))
Export Import Trade Balance
30,000
20,000
10,000
-10,000
-20,000
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Line graph 3.3b: Export, Import and Trade balance(in Mn. USD) From year 2015/16-2022/23(G.C.))
Ethiopia's trade deficit remains a challenge, with exports growing slowly while imports remain
high. Addressing foreign exchange shortages and boosting export competitiveness are key to
improving trade balance.
To achieve a more balanced trade position, Ethiopia will need to prioritize diversifying its
exports beyond traditional agricultural commodities, invest in value-added industries, and
improve competitiveness in global markets. Additionally, enhancing domestic production and
reducing reliance on imported goods can help mitigate the trade deficit. Addressing these
issues will be vital for sustainable long-term economic growth and stability.
