Economist Intelligence Unit,Eritrea Economy, Politics and GDP Growth Summary

Monthly highlights

Eritrean politics will continue to be dominated by the country's only political party, the People's Front for Democracy and Justice (PFDJ), and the president, Isaias Afewerki. The PFDJ's authoritarianism means that all forms of dissent will be harshly suppressed and the steady flow of Eritreans seeking asylum outside the country will continue. The UN Security Council has imposed a second set of sanctions on Eritrea in response to evidence of the country's continued role in destabilising the Horn of Africa region. Eritrea's belligerent foreign policy is largely motivated by the country's long-standing border dispute with Ethiopia, for which there is no end in sight. Despite the continued diversion of resources and manpower to the military, real GDP growth is forecast at 6% in 2012 and 7% in 2013 as investment in mining rises—the sector is unlikely to be substantially affected by the latest round of sanctions—and the Koka gold mine begins production in late 2013. Despite the onset of mining, macroeconomic imbalances are expected to persist, marked by large fiscal deficits, double-digit inflation and an overvalued currency.

Economic growth

(% unless otherwise indicated)
	2014	2015	2016
US GDP	2.2	2.3	2.3
OECD GDP	2.1	2.2	2.2
World GDP	2.9	3.1	3.0
World trade	6.2	6.5	6.7
Source: Economist Intelligence Unit

Inflation indicators

(% unless otherwise indicated)
	2014	2015	2016
US CPI	2.1	2.2	2.2
OECD CPI	2.2	2.2	2.3
Manufactures (measured in US$)	1.5	1.8	1.9
Oil (Brent; US$/b)	108.3	104.0	110.0
Non-oil commodities (measured in US$)	-3.6	3.4	2.8
Source: Economist Intelligence Unit

Financial variables

(% unless otherwise indicated)
	2014	2015	2016
US$ 3-month commercial paper rate (av; %)	0.3	1.2	2.6
¥ 3-month money market rate (av; %)	0.9	1.3	1.5
¥:US$ (av)	81.0	82.0	83.0
Source: Economist Intelligence Unit