Economic growth depends on donor money

Eritrea is planning to hold elections for a new parliament, local government and for the presidency, in December 2001. The Economic Intelligence Unit (EIU) said there was “some doubt as to how smooth the process will be” in the first elections to take place in the country following its independence from Ethiopia. The lack of political parties and of any “real identifiable opposition movement” meant the People’s Front for Democracy and Justice (PFDJ) regime and its leader, Isayas Afewerki, was likely to remain, the EIU said. It said most large organisations and workers coalitions were currently under the PFDJ, and were unlikely to mobilise against the government.

The EIU said economic growth in Eritrea was heavily dependent on normal weather patterns, demobilisation, and support by international financial organisations. Some moderate increases in agricultural production could be expected, but production of Eritrea’s main income earners such as textiles, leather goods and livestock could take longer to recover. It said the main driving force behind growth in 2001-02 would be donor money, aimed at post-war reconstruction and the resettlement of displaced populations.
If drought persisted and food shortages continued, inflation would probably remain high, the EIU Country Outlook for March said.