Evaluate the current and predict the future real GDP of Afar regional state, Ethiopia

Abstract

Ethiopia has implemented numerous national development plans and strategies to achieve sustainable economic growth at both the national and regional levels, specifically in the Afar region. However, there has been a lack of assessment regarding the outcomes and expected goals of these plans and strategies, particularly for the regional economy. Hence, this study assesses the current and future gross domestic product (GDP) of Ethiopia’s Afar regional state. It analyzes the data using a descriptive and econometric model called autoregressive integrated moving average (ARIMA). The analysis shows that the regional GDP has been increasing over time, but per capita income remains below the national average. The service sector dominates the economy, while the growth of the industry sector has been stagnant. This indicates that development policies have not achieved their goals of reducing poverty and transforming the economy. Using the ARIMA model, it is projected that the Afar regional GDP will gradually increase from 19,300.20 Billion Birr to 21,678.20 Billion Birr between 2023q1 and 2025q4, with an average growth rate of 10%. It is important for development policies to prioritize not just economic growth, but also social development within local communities. This involves addressing issues related to institutional capacity, and governance, and leveraging agricultural resources to benefit agro-pastoralists and pastoralists, as the agricultural sector is the main driver of the economy. By understanding the present and projected GDP of the Afar regional state, policymakers and stakeholders can make informed decisions for sustainable and inclusive economic growth.