Over the past several years, Eritrea has experienced modest growth, which is seen with a boost in the GDP. Interestingly, approximately 32% of the GDP is from overseas workers. In the early part of the 1950s, Eritrea became a part of Ethiopia and because it was a more advanced industrial and urban infrastructure, it helped Ethiopia’s economy. In fact, at that time, Eritrea accounted for the majority of the development and budget of Ethiopia. Then in 1993, the two countries split but unfortunatel
Over the past several years, Eritrea has experienced modest growth, which is seen with a boost in the GDP. Interestingly, approximately 32% of the GDP is from overseas workers. In the early part of the 1950s, Eritrea became a part of Ethiopia and because it was a more advanced industrial and urban infrastructure, it helped Ethiopia’s economy. In fact, at that time, Eritrea accounted for the majority of the development and budget of Ethiopia. Then in 1993, the two countries split but unfortunately, the once strong economy of Eritrea was devastated because of war. Therefore, the country had to depend heavily on income from a very small agricultural sector and ports.
Even after Eritrea and Ethiopia split, conflict remained between the two until 2000. Because of this, virtually all of Eritrea trade with Ethiopia was stopped, which reduced port activity significantly and lowered overall income. While experts disagree slightly as to the amount of loss over this loss of Eritrea trade with Ethiopia, some suggest it was near $225 million in livestock and that more than 50,000 homes were destroyed. Because of this, the GDP growth hit 0% and even in the latter part of 2000, it dropped to minus 0%.
Even planting crops was stopped, which caused the production of food to drop dramatically by 62%, with another $24 million worth of damage to public buildings. While hostilities with Ethiopia finally ceased, Eritrea was faced with another devastation when the country experienced serious drought. All of this combined literally caused the agricultural sector of this country to reach record lows. Working hard to recoup, some improvement was seen in 2003 when at that time, the GDP saw a 2% growth.
Even thought Eritrea’s GDP was growing, the per capita numbers showed a 10% loss. Finally, some stability was formed in 1997, a time when the GDP growth was averaging 7%. While true numbers are still hard to come by, most economists and financial experts suggest that the most recent GDP consisted of 63% services, with industry accounting for 26% and the rest being for agriculture.
Of the people living in Eritrea, approximately 80% are involved with agriculture in one form or another but without modern techniques and equipment for farming, this sector still struggles. Then, with Eritrea receiving a significant amount of rainfall, soils being drained of nutrients, and very little financial investment, the agricultural sector has a long way to go. The crops grown in Eritrea include lintels, beans, barley, millet, wheat, sorghum, and teff. In addition, Eritrea trade includes meat, skins, and various dairy products.
Keep in mind that with so many land mines remaining after Eritrea’s war with Ethiopia, one quarter of this country’s most product land cannot be farmed. Because of this, forecasters believe that domestic food production will only provide 20% or less for the people of this land, which means that more than two million people rely on food needs from humanitarian efforts. In addition, because most of the crops in Eritrea depend on rainfall, whenever there are periods of drought, this industry suffers. Additionally, Eritrea currently does not have proper water storage so even when it does rain, being able to capture and hold water to farm is near impossible.
Interestingly, forests in Eritrea cover more than 1.5 million hectares but even so, forestry is not used for economic growth. Instead, the majority of round wood grown is used for fuel and with deforestation in place, very little money comes from wood grown in Eritrea forests. Then, we know that fishing accounts for some of Eritrea trade due to the vast coastline. Along with fish, sea cucumbers coming out of the Red Sea are a part of Eritrea exports, primarily being shipped to Asia and Europe. While the maximum yield is around 80,000 tons, only 14,000 tons are currently being traded.
For livestock, meat from camel, zebu, sheep, cattle, and goats account for the annual 31,000 tons for meat, 40,000 tons of cow’s milk, and 2,000 tons of eggs. Another area of Eritrea that needs to be explored is mining. Since this country has significant mineral deposits, it provides an opportunity for additional Eritrea exports, especially for gold, but also granite and marble. Today, 10 companies have mining operations but again, with literally hundreds of thousands of land minds left behind after fighting with Ethiopia, getting to some of the mineral deposits is hindered.
Other sectors involved with Eritrea exports and Eritrea imports include services, tourism, industrial, energy, banking, and labor. Today, Eritrea Trade, Eritrea Exports, Eritrea Imports are estimated at $65 million free on basis with the main partners being Malaysia, Italy, and France. Then for Eritrea imports, this is around $622 million, to include the United States, Italy, Turkey, the United Kingdom, and Russia as partner countries.