Ethiopia records deflation for third month running

October 21, 2009

“The main reason for the decline is the fall in the prices of food components, especially cereals,” the country’s Central Statistical Agency said in a statement.

Ethiopian Prime Minister Meles Zenawi has said that a halt to government borrowing and a rise in bank reserves also underpinned the steadily declining rate in sub-Saharan Africa’s second most populous nation.

Ethiopia’s central bank instructed private banks to restrict borrowing as part of the bid to curb inflation.

The global recession has slashed international demand for Ethiopia’s agricultural exports and power cuts have ravaged business, fuelling a foreign currency shortage.

The government says it expects growth of about 10 percent in 2010. Opposition parties contest the government’s statistics.

Ethiopia, one of Africa’s biggest potential markets with some 80 million people, is drawing growing foreign investor interest in agriculture, hydropower and oil and gas exploration.