Ethiopia sees annual growth down at 10 pct

By Alastair Sharp

CAIRO (Reuters) - Ethiopia expects economic growth to slow to 10 percent in the current fiscal year from 11.6 percent a year earlier, while inflation should dip into single digits by 2009/10, its finance minister said on Sunday.

Ethiopia has suffered falling exports and has struggled with inflation since the start of the global economic crisis, with inflation hitting a high of 64.2 percent in July 2008 driven by high food and fuel prices.

"We expect strong growth this year. Our estimate is around 10 percent," Sofian Ahmed told reporters on the sidelines of an African finance conference in the Egyptian capital. He added: "Next year ... definitely more than 8 percent."

Ahmed said he expected inflation for the current fiscal year to be around 15 to 16 percent, with a decline to single digits in the 2009/10 fiscal year.

"(In 2008/09) it will still be in the tens (teens) ... Maybe fifteen or 16 percent," he said. "It is coming significantly down, for the next budget year we estimate it will be single digits, around 8 or 9 percent."

Ahmed said Ethiopia had recorded economic growth of 11.6 percent in the 2007/08 year and an average of 11.2 percent over the last five years, on the back of a strong agricultural sector, the backbone of its economy.

Ethiopian Prime Minister Meles Zenawi said in April a halt on government borrowing and a rise in bank reserves had underpinned the steadily declining inflation rate and he expected it to reach single figures by June.

The International Monetary Fund has predicted growth of 6.5 percent for Ethiopia in 2009.