Economy improving

The Eritrean economy is improving, while defence spending and inflation are declining, the ruling People's Front for Democracy and Justice (PFDJ) web site Shaebia reported on 14 September. Gross Domestic Product (GDP) was expected to grow by 7 percent during 2001, and by 11 percent by 2002, after a three-year decline. Agricultural production which was 85,000 mt last year was expected to triple this year. Other contributing factors to this economic upturn were spending on reconstruction, easing of labour constraints, and renewed private investment, said Shaebia. Another contributing factor was the sharp decline in defence spending, which had risen from 13 percent of GDP in 1997 to 38 percent during the conflict with Ethiopia, had now dropped to 21 per cent, and was projected to drop to 9 per cent in 2002. Inflation, which had reached 27 per cent in 2000, had declined to 15 percent and was projected to decline further to 5 percent as inflationary pressures were reduced, the report said.