Ethiopia’s economy faces severe challenges. Inflation runs at over 8% and the gross domestic savings rate is only 4% of GDP, comfortably placing Ethiopia in the bottom 30 of the Index on the latter variable. The unemployment rate is almost 21%, which is the sixth highest rate, globally**. Ethiopia places 69th* in terms of affordability of food and shelter, and only four out of 10 people* are satisfied with their standard of living, which places the country 91st in the Index on this variable. Only one in three* people believe that job market opportunities are improving, although the average citizen believes that general economic conditions are getting better*; the country ranks in the top half of the Index with respect to economic expectations. This is consistent with an average increase in GDP per capita of almost 8% annually between 2005 and 2009. There is, however, limited potential for additional growth: capital per worker in Ethiopia is the fourth lowest worldwide, and the country places 76th in terms of market size. At 4%, the proportion of manufactured exports that come from high-tech sectors is very low and non-performing loans account for over 5% of total bank loans. The fact that less than half* of Ethiopians have confidence in the country’s financial institutions, reflects this. However, more positively, the country is attractive as a destination for foreign direct investment. No data on self-reported employment were available.

Ethiopia - The 2010 Legatum Prosperity Index