Ethiopia's poverty-stricken economy is based on agriculture, which accounts for half of GDP, 85% of exports, and 80% of total employment. The agricultural sector suffers from frequent drought and poor cultivation practices. Coffee is critical to the Ethiopian economy with exports of some $270 million in 2000/01, but historically low prices have seen many farmers switching to qat to supplement their income. The war with Eritrea in 1999-2000 and recurrent drought have buffeted the economy, in particular coffee production. In November 2001 Ethiopia qualified for debt relief from the Highly Indebted Poor Countries (HIPC) initiative. Under Ethiopia's land tenure system, the government owns all land and provides long-term leases to the tenants; the system continues to hamper growth in the industrial sector as entrepreneurs are unable to use land as collateral for loans. Strong growth in 2002 resulted from good rainfall early in the year, the cessation of hostilities, and renewed foreign aid and debt relief. But drought struck again late in 2002, and the World Food Program (WFP) estimates 14 million Ethiopians need food immediately to survive into 2003. The government estimates than annual growth of 7% is needed to reduce poverty, yet the maintenance of 5% in 2003 will be quite difficult (one estimate is for 1.5% growth).

purchasing power parity - $48.53 billion (2002 est.)

3% (2002 est.)

purchasing power parity - $700 (2002 est.)

agriculture: 52%
industry: 11%
services: 37% (2001 est.)

45% (2002 est.)

4% (2003 est.)

NA

agriculture and animal husbandry 80%, government and services 12%, industry and construction 8% (1985)

NA

food processing, beverages, textiles, chemicals, metals processing, cement

6.7% (2001 est.)