The Economy of Eritrea

The Economy of Eritrea

Eritrean Economy

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. Despite difficulties for international companies in working with the Eritrean government, a Canadian mining company signed a contract with the GSE in 2007 and plans to begin mineral extraction in 2010. Eritrea also opened a free trade zone at the port of Massawa in 2008. 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 - real growth rate: 2% (2008 est.) 1% (2007 est.) -1% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 17.4% industry: 23.2% services: 59.4% (2008 est.)

Population below poverty line:

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

Distribution of family income - Gini index:

Inflation rate (consumer prices):

Labor force: NA

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

Unemployment rate: NA%

Budget: revenues: $234.5 million expenditures: $523.1 million (2008 est.)

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

Industrial production growth rate: 2% (2008 est.)

Electricity - production: 253 million kWh (2006 est.)

Electricity - production by source:

Electricity - consumption: 216 million kWh (2006 est.)

Electricity - exports: 0 kWh (2007 est.)

Electricity - imports: 0 kWh (2007 est.)

Oil - production: 0 bbl/day (2007 est.)

Oil - consumption: 5,186 bbl/day (2006 est.)

Oil - exports: 54.74 bbl/day (2005)

Oil - imports: 4,924 bbl/day (2005)

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

Natural gas - production: 0 cu m (2007 est.)

Natural gas - consumption: 0 cu m (2007 est.)

Natural gas - exports: 0 cu m (2007 est.)

Natural gas - imports: 0 cu m (2007 est.)

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

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

Exports: $14 million f.o.b. (2008 est.)

Exports - commodities: livestock, sorghum, textiles, food, small manufactures

Exports - partners: Italy 34.4%, China 16.2%, Sudan 15.2%, France 9.4%, Saudi Arabia 5.2%, Australia 4.4% (2007)

Imports: $601 million f.o.b. (2008 est.)

Imports - commodities: machinery, petroleum products, food, manufactured goods

Imports - partners: Saudi Arabia 19.1%, Italy 15.1%, China 11.1%, Turkey 8.3%, Germany 7.2%, Ukraine 5.1% (2007)

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

Economic aid - recipient:


Currency code:

Exchange rates: nakfa (ERN) per US dollar - 15.38 (2008 est.), 15.5 (2007), 15.4 (2006), 14.5 (2005), 13.788 (2004) note: the official exchange rate is 15 nakfa to the dollar

Fiscal year:

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