Economy of Eritrea

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The Economy of Eritrea has experienced modest growth in recent years, indicated by an improvement in Gross domestic product (GDP) in 2004 of 2.5% over 2003. However, worker remittances from abroad are estimated to account for 32 percent of gross domestic product.[2]

Contents

Economic history

In the early 1950s, when Eritrea was awarded to Ethiopia, it possessed a far more sophisticated urban and industrial infrastructure than Ethiopia. Eritrean critics said industrialization in the years since then focused on other parts of Ethiopia. But the then-province of Eritrea was the second highest recipient of Ethiopia's budget and development, only preceded by the province of Shewa. By the time of its independence from Ethiopia in 1993, Eritrea’s economy had been destroyed by war and was dependent on income from ports and its small agricultural base. The onset of conflict with Ethiopia, which lasted from 1998 to 2000, halted all bilateral trade, severely reducing port activity and income in Eritrea. According to World Bank estimates, Eritrea lost US$225 million worth of livestock and 55,000 homes during the war. GDP growth fell to zero in 1999 and to -1% in 2000.[3] Planting of crops was prevented in Eritrea's most productive western region, causing food production to drop by 62%.[citation needed] Damage to public buildings is estimated at US$24 million.[2] The end of hostilities with Ethiopia was followed by consecutive years of drought, which together have crippled the agricultural base [2]

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