Economical overview
Eritrea is one of the world's poorest
countries. Half a century of war or warlike conditions
have left deep traces. In connection with the fighting,
roads and other infrastructure were destroyed, farmland
was destroyed and countless people were driven from
their homes. The country's authoritarian rule and unity
against the outside world hamper this development.
Exact figures and statistics on the economy are often
missing because the government does not allow any
transparency. No national budget has ever been
published, but it is clear that the domestic industry is
small and exports are limited.
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Countryaah.com:
Major imports by Eritrea, covering a full list of top products imported by the country and trade value for each product category.
A large majority of the population lives from
cultivation and livestock management to housing needs
and is outside the formal economy. The country does not
produce enough food to feed its own population.
Deficiency always prevails; the years when the harvest
fails the situation becomes acute.
The recovery after the war against Ethiopia in
1998–2000 (see Modern History) was hindered by the
conflict remaining unsolved until June 2018, when peace
was concluded. Since then, trade with the outside world
has expanded, but it is still unclear what this means
for the country's economy and for the living conditions
of the Eritreans. Defense spending is very high and the
supply of, above all, trained labor is limited.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including ERI which represents the country of Eritrea.
State control
Plans for the sale of state-owned companies that were
presented after independence in 1993 have mainly meant
that a few people in the governing elite have taken
personal control of some businesses. The governing
clique is basically synonymous with the government and
the state has control over all social functions,
including the economy. High ranking militaries own
companies in the construction sector and IT technology,
among other things, and are assumed to have access to
free labor (see Current policy).
The political instability in the region makes it slow
to attract investors. An exception is the mining sector,
where several foreign companies are active. Gold mining
on a larger scale began in 2011 (see Natural Resources,
Energy and the Environment). The Eritrean State is
entitled to 40 percent of the revenue.
The conflict with Ethiopia halted a previously
important source of income: trade via the ports of Assab
and Massawa. In both cities, economic free zones were
opened in 2009 and efforts have been initiated to
upgrade the ports. However, competition is fierce in the
region and little indicates that business has started on
any large scale in the zones. Following the peace
agreement 2018, coastal Ethiopia showed interest in
using the Eritrean ports, but so far the neighboring
country's trade is mainly via Djibouti.
"Tax" from abroad seritans
An important source of income is money that Eritreans
abroad send to their relatives. Eritrea also requires
overseas Eritreans to pay "tax", something unique in
Africa. The expatriates are expected to transfer 2
percent of their income to Eritrea. Many pay, out of
genuine loyalty or fear of causing distress to relatives
in the home country. The money from abroad is expected
to amount to around one third of GDP, but the figure is
uncertain. The government is also trying to raise money
through festivals, concerts and other cultural events
abroad.
The dependence on aid and loans is great. But at the
same time, the government is careful to assert the
country's independence and, over time, has become
increasingly suspicious of the world's intentions. Since
2005, it has been difficult for foreign countries to
assist Eritrea with supplies, despite the urgent needs.
The United States, which was previously the largest
donor of aid, was ordered to give up completely. Some
support is received from the World Bank, the EU and
individual countries in Europe and the Middle East.
Small foreign trade
Eritrea traded mainly with Ethiopia before the
1998-2000 war. Subsequently, exports almost collapsed,
partly because of a lack of goods to sell abroad. The
trade deficit has long been large, as imports far exceed
exports.
The mining is expected to eventually be able to
provide a much needed supplement of foreign currency.
The renovation of the port of Massawa is also expected
to contribute to increased trade. Massawa has also been
given an international airport, which enables the export
of fresh fish catches.
Sales abroad consist mainly of copper, gold, hides
and skins, cotton and vegetables. Imports are dominated
by food, oil, machinery and other industrial goods. The
largest exporting countries are China, India and Canada.
Imports are mainly purchased from the United Arab
Emirates, China, Saudi Arabia and Italy.
Eritrea is a member of the Comesa regional common
market, but the trade exchange with the region is very
small.
FACTS - FINANCE
GDP per person
US $ 811 (2011)
Total GDP
US $ 2 608 million (2011)
GDP growth
8.7 percent (2011)
Agriculture's share of GDP
12.0 percent (2017)
Manufacturing industry's share of GDP
6.0 percent (2016)
The service sector's share of GDP
59.0 percent (2017)
Inflation
-27.6 percent (2019)
Government debt's share of GDP
174.3 percent (2018)
External debt
US $ 819 million (2017)
Currency
Nakfa
Merchandise exports
US $ 37 million (2000)
Imports
US $ 471 million (2000)
Current account
- US $ 105 million (2000)
Commodity trade's share of GDP
53 percent (2011)
Main export goods
Copper, Gold, Leather Goods, Cotton (2016)
Largest trading partner
China, Italy, India, Saudi Arabia, Canada (2016)
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