According to a report released by the World Bank on November 25th, despite being affected by internal economic instability and the stagnation of the tourism and hotel industry, Ethiopia is expected to see a GDP growth of 4.8% in 2022, then rebound to 5.7% in 2023. Based on World Bank data, Ethiopia's average economic growth rate in the decade before 2020 was 9.8%.
Data shows that Ethiopia, projected to have 117 million residents in 2022, is one of the strongest economies in Africa and one of the oldest nations in the world, having long dominated the Horn of Africa. The development of industry and services has driven the country's expansion. Moreover, Ethiopia's macroeconomy is resilient, maintaining its growth trajectory amidst various bottlenecks caused by man-made and natural challenges, impressing global economists.
International financial teams have been continuously reporting for weeks that Ethiopia is the most promising country in Africa to become the next manufacturing hub. Although the global economic slowdown has had a negative impact on Africa's economy, Ethiopia is closely learning and adopting China's successful economic methods, especially in the agricultural and industrial sectors.
McKinsey's latest report affirms that the majority of Africans believe China's economy has had a positive influence locally. Over the past 20 years, China has been a model of Ethiopia's economic prosperity.
The report shows that since 1991, in the face of scarce national resources, Ethiopia has been using China's economic development model as a template, with Chinese enterprises building Ethiopian cities from scratch.
With the assistance of the Chinese, Ethiopia has also invested heavily in the construction of roads, railways, and air infrastructure to alleviate transportation issues and increase exports to importers.
This reflects the increasing fragmentation of the global economy, with Asian and African countries urgently needing a successful economic management model. Analysis suggests that Ethiopia, hoping to develop its economy like China, is betting on becoming the next Chinese economy. Undoubtedly, Ethiopia is fully replicating the essence of the Asian industrialization path.
Several foreign media outlets, including the Financial Times and the US Quartz Financial website, have also reported similar analyses, considering Ethiopia's economic miracle over the past decade and its potential to develop its economy like China.
New information indicates that Ethiopia, with substantial foreign investment, has expanded from manufacturing to infrastructure and now into public health, education, and the internet economy, primarily from China. This has propelled it to become the largest economy in East Africa, with new modern buildings everywhere, resembling China's third-tier cities, and a high-speed railway connecting Djibouti and the coast, all built with Chinese assistance.
To further promote economic development, Ethiopia is also implementing the second phase of its Growth and Transformation Plan. The Ethiopian authorities have formulated policies friendly to foreign investors, attracting garment manufacturers from South and East Asia.We have observed that Ethiopia has been China's top trade partner in Africa for 12 consecutive years. This country is located at the heart of the Horn of Africa and serves as a gateway to the African market and the vast e-commerce consumer market. It has a large number of well-educated and low-cost young labor force, which is very attractive to Chinese investors.
At the other end of Asia, Vietnam's economy has also begun to emulate China's development model in some areas, hoping to develop its economy like China. The British magazine The Economist has said that today's Vietnamese economy is very similar to China's economy 20 years ago, eager to learn from China.
Vietnamese media has stated that 98% of Vietnamese businesses are small and medium-sized enterprises, and there is much to learn from the Chinese market. Professor Robert Ross from Boston University has said that Vietnam's economic development requires Chinese capital and trade, as well as assistance from China in various aspects, including infrastructure improvement.
According to World Bank data, due to Vietnam's cheap land and labor resources, it has learned from China's experience in attracting foreign investment in manufacturing. Soon after, its per capita GDP began to rise rapidly. In recent years, Vietnam has been continuously increasing market openness, and more and more foreign capital, including Chinese enterprises, has been pouring into Vietnam.
However, once the global economic development is affected or if there are problems in Vietnam's domestic economic environment, then Vietnam will amplify the impact of the external environment. For example, according to Bloomberg reports, Vietnam has launched 5G services and made progress, but does not plan to involve Chinese enterprises in the construction. Analysts believe that this seems to be a company's choice of products, but it exposes the possibility that Vietnam's economy may have a tendency to abandon its benefactors. Another example is that Vietnamese rice exported to the Chinese market has repeatedly had quality issues, and even arbitrary price increases have been rejected by Chinese enterprises.
However, some analyses believe that Vietnam cannot become the next world factory or the next Indian economy. Some views suggest that Vietnam's current situation is more like the eager-to-succeed Indian economy. Reuters has stated that Vietnam's booming economy is becoming a victim after the Federal Reserve's aggressive interest rate hikes. Under the burden of high fiscal deficits, it is very likely to become a replica of the Indian economy.