|Dire Dawa, Ethiopia. Flickr/UK Dept. for Int'l Dev.|
The study identifies a number of positive features in Ethiopia's macroeconomic performance. These include strong growth based on an increasingly diversified economy, stable non-food price inflation, increasing exports to a diversified range of markets, an improved trade balance, and generally stable economic policies and a solid investor protection framework. The study argues that the two key challenges to sustained economic performance are high and volatile inflation rates and negative real interest rates, which generate diverse macroeconomic management challenges and constrain savings growth needed to fuel investment. The study also expresses concern over Ethiopia's rising exchange rate.