Economy - overview With independence from Ethiopia on 27 April 1993, Eritrea faced the bitter economic problems of a small, desperately poor African country. The economy is largely based on subsistence agriculture, with over 70% of the population involved in farming and herding. The small industrial sector consists mainly of light industries with outmoded technologies. Domestic output (GDP) is substantially augmented by worker remittances from abroad. Government revenues come from custom duties and taxes on income and sales. Road construction is a top domestic priority. Eritrea has inherited the entire coastline of Ethiopia and has long-term prospects for revenues from the development of offshore oil fields, offshore fishing, and tourism. Eritrea's economic future depends on its ability to master fundamental social and economic problems, e.g., overcoming illiteracy, promoting job creation, expanding technical training, attracting foreign investment, and streamlining the bureaucracy.

GDP purchasing power parity - $2.2 billion (1996 est.)

GDP - real growth rate 6.8% (1996 est.)

GDP - per capita purchasing power parity - $600 (1996 est.)

GDP - composition by sector
agriculture: 18%
industry: 20%
services: 62% (1995 est.)

Inflation rate - consumer price index 4% (1997 est.)

Labor force NA

Unemployment rate NA%

Budget
revenues: $226 million
expenditures: $453 million, including capital expenditures of $88 million (1996 est.)

Industries food processing, beverages, clothing and textiles

Industrial production growth rate NA%

Electricity - capacity 73,000 kW (1995)

Electricity - production NA kWh

Electricity - consumption per capita NA kWh

Agriculture - products sorghum, lentils, vegetables, maize, cotton, tobacco, coffee, sisal (for making rope); livestock (including goats); fish

Exports
total value: $71 million (1996 est.)
commodities: livestock, sorghum, textiles, food, small manufactures
partners: Ethiopia 67%, Sudan 10%, Saudi Arabia 4%, US 3%, Italy, Yemen (1996)

Imports
total value: $499 million (1996 est.)
commodities: processed goods, machinery, petroleum products
partners: Ethiopia, Saudi Arabia, Italy, United Arab Emirates

Debt - external $162 million (1995 est.)

Economic aid
recipient: ODA, $NA

Currency 1 nafka = 100 cents

Exchange rates nakfa per US$1 = 7.2 (March 1998 est.)
note: following independence from Ethiopia, Eritrea continued to use Ethiopian currency until late in 1997 when Eritrea issued its own currency, the nakfa, at approximately the same rate as the birr, i.e., 7.2 nakfa per US$1

Fiscal year calendar year

NOTE: The information regarding Eritrea on this page is re-published from the 1998 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Eritrea Economy 1998 information contained here. All suggestions for corrections of any errors about Eritrea Economy 1998 should be addressed to the CIA.