Eritrean economy close to collapse

25 September 2007

A report released today by Chatham House states that the economy of Eritrea is close to collapse. A combination of internal repression and regional and international isolation has placed intolerable strain on the country's society.

Eritrea is also facing a continued border dispute with Ethiopia and is in danger of being branded a state sponsor of terrorism by the United States. External threats such as these help to fuel paranoia within the country, and tie up more than 350,000 people in national service - preventing the country's youth from contributing to the economy.

Eritrea continues to survive on remittances from its diaspora communities. Contributions from these groups account for a third of the country's entire GDP. With annual imports of $700 million and exports of only $20 million, the country is also facing a looming debt crisis.

Even if peace does return to the region, Eritrea cannot assume a swift return to the beneficial economic relationship it used to enjoy with Ethiopia. It has lost its role as the main market for Ethiopian exports and no longer acts as a trade outlet for its neighbour. It will be a challenge for Eritrea to make its economy fit for the modern world.

Click here to read the report - Eritrea's Economic Survival.

Notes to editors:

The report summarises a conference held by the Chatham House Horn of Africa Group in April.

For further information please contact:
Sean Armstrong
Press Officer
Chatham House
Direct: +44 (0) 20 7957 5739
Mobile: +44 (0) 78 4985 3757
Email: Sean Armstrong

ENDS

Surname
Membership No.
	Remember me