COVID‐19 pandemic in Ethiopia: Socioeconomic impacts and government recovery measures

Abstract

The study assesses the implications of the COVID‐19 pandemic and the government responses for the economic performance and poverty incidence in Ethiopia for the fiscal years of 2019/20 and 2020/21. It accounts for the impacts of the pandemic on factor productivity, trade costs, export demand, tourism, remittances and foreign direct investment (FDI). An economy‐wide multi‐sectoral model determines impacts at macroeconomic, sectoral, and household levels. A poverty analysis module characterises the effects of the pandemic on food poverty headcount, gap, and severity. Results show that the COVID‐19 impacts could have been significant across all macroeconomic metrics had the government not intervened through fiscal and spending measures. However, much of the recovery through government intervention was driven by agricultural and food processing sectors while output in manufacturing, construction and services sectors continued to be negatively affected. Without government intervention, the food poverty headcount would have increased by about five percentage points. The government measures have mitigated that effect allowing food poverty to reach pre‐COVID‐19 values in 2020/21. Nevertheless, with all measures combined, poor urban households may have been left behind and would require more targeted support to compensate for a significant loss of income.